In measuring risk-weighted assets for the purpose of calculating capital adequacy ratios, generally the standardized approach or the internal ratings-based approach is applied. However, for the application of the internal ratings-based approach, which relies on the internal rating system of the relevant bank or bank holding company, the bank or bank holding company must receive approval from the Financial Supervisory Service after a trial evaluation period. While we have commenced the process to receive such approval, we are currently required to apply the standardized approach to measure our risk-weighted assets as a newly-established bank holding company, and as a result, our capital adequacy ratios may be lower compared to those of Woori Bank.

on a limited basis, identifying corporate loans subject to normalization efforts based on the cash-flow situation of the borrower.

Once we have confirmed the details of anon-performing loan, we make efforts to recover amounts owed to us. Methods for resolvingnon-performing loans include the following:

commencing collection proceedings;

commencing legal actions to seize collateral;

writing off these amounts, transferring them to specific subsidiaries in charge of collections and authorizing those subsidiaries to recover what they can with respect to these amounts or to sell these loans to third parties; and

with respect to large corporations, commencing or participating in voluntary workouts or restructurings mandated by Korean courts.

In addition to making efforts to collect on ournon-performing loans, we also undertake measures to reduce the overall level of ournon-performing loans. These measures include:

selling ournon-performing loans to structured companies established in connection with our joint ventures with several financial institutions; and

selling ournon-performing loans to third parties, including UAMCO.

See “—Sales ofNon-Performing Loans.” We generally expect to suffer a partial loss on loans that we sell or securitize, to the extent such sales and securitizations are recognized as such under IFRS.

Foreclosure and Collateral.We generally foreclose on mortgages or exercise our security interests in respect of other collateral if a collateralized obligation becomes overdue for more than three months. At that time, we will petition a court to foreclose on collateral and to sell that collateral through a court-supervised auction. Under Korean law, that petition must be filed with a court that has jurisdiction over the mortgaged property, and must be filed together with a copy of the mortgage agreement and an extract of the court registry regarding the subject property. The court will then issue an order to commence the foreclosure auction, which will be registered in the court registry of the subject property. If no bidder bids at least the minimum amount set by the court on the first auction date, the court will set another date for a subsequent auction approximately one month later. Each time a new auction date is set, the minimum auction price will be lowered by approximately 20%. Unlike laws relating to foreclosure in the United States, Korean law does not provide fornon-judicial foreclosure. During ~~2015, 2016~~2017, 2018 and ~~2017,~~2019, we ~~foreclosed on~~held collateral ~~we obtained~~ with respect to loan balances overdue for more than three months representing approximately ~~0.3%~~0.1%, ~~0.2%~~0.1% and 0.1%, respectively, of our ~~average~~ interest-bearing loan balances in each of those periods.

Korean financial institutions, including us, maintain general policies to assess a potential customer’s eligibility for loans based on that entity’s credit quality, rather than requiring a particular level of collateral, especially in the case of large corporate borrowers. As a result, the ratio of our collateral tonon-performing corporate loans is relatively low when compared with our total exposures. For secured consumer loans, however, we generally impose limits on loan amounts based on the collateral we receive. See “—Consumer Banking—Lending Activities.”

We reflect this collateral level when we estimate the future cash flow for our loans, which we calculate using a discounted cash flow method. With respect to loans to borrowers that we do not believe will be going concerns in the future, the lower collateral ratio has a direct effect on cash flow estimates and results in a higher level of allowances. With respect to loans to borrowers that we expect to be going concerns, the lower collateral ratio has an effect on cash flow estimates but we also consider other factors, including future operating income and future asset disposals and restructuring, in determining allowance levels. Accordingly, for these latter borrowers, the effect of lower collateral levels on allowances is mitigated by other characteristics of the borrower, and that lower collateral level will not necessarily result in a higher level of allowances.

Sales ofNon-Performing Loans

The overall asset quality of our loan portfolio is affected by sales ofnon-performing loans. These sales have been made primarily to UAMCO and various structured companies as further described below.

The following table sets forth information regarding our sales of loans for the periods indicated:


	Year Ended December 31,																			Year Ended December 31,
	2015							2016						2017						2017						2018						2019
Purchaser	Net Carrying Amount⁽¹⁾		Sale Price		Gain (Loss)			Net Carrying Amount⁽¹⁾		Sale Price		Gain (Loss)		Net Carrying Amount⁽¹⁾		Sale Price		Gain (Loss)		Net Carrying Amount⁽¹⁾		Sale Price		Gain (Loss)		Net Carrying Amount⁽¹⁾		Sale Price		Gain (Loss)		Net Carrying Amount⁽¹⁾		Sale Price		Gain (Loss)
	(in billions of Won)																			(in billions of Won)
KAMCO																				￦	—	￦	—	￦	—	￦	—	￦	—	￦	—	￦	95	￦	101	￦	6
Structured companies	￦	162	￦	193	￦	31		￦	213	￦	244	￦	31	￦	260	￦	273	￦	13	￦	260	￦	273	￦	13	￦	155	￦	197	￦	42	￦	55	￦	60	￦	4
UAMCO		247		303		56			66		78		12		—		—		—		—		—		—		—		—		—		40		47		7
Others		167		140		(27	)		218		259		41		—		—		—
Others⁽²⁾																					—		—		—		—		19		19		—		15		15

Total	￦	576	￦	636	￦	60		￦	497	￦	581	￦	84	￦	260	￦	273	￦	13	￦	260	￦	273	￦	13	￦	155	￦	216	￦	61	￦	190	￦	223	￦	32

⁽¹⁾	Net carrying amount represents the net value ofnon-performing loans after deduction of allowance for credit losses on such basis.

⁽²⁾	Includes ￦5 million of sales to Korea Asset Management Corporation in 2018, which may be subject to repurchase by us.

United Asset Management Corp. UAMCO was established in late 2009 in the wake of the global financial crisis by six major commercial banks in Korea, including ~~us,~~Woori Bank, to purchase, sell and securitizenon-performing loans and to engage in corporate restructuring activities, among other things. Currently, weWoori Bank and six other banks each hold a 14% equity interest in UAMCO, while one other bank holds a 2% equity interest. ~~We have~~Woori Bank has committed to contribute approximately ~~￦177~~￦142 billion of capital to UAMCO, of which approximately ￦87 billion has been contributed to date. Upon the fulfillment of such capital contribution commitments from usWoori Bank and the seven other banks, UAMCO may request a loan from the seven banks holding a 14% equity interest in UAMCO, which includes ~~us,~~Woori Bank, of up to a combined ￦2 trillion, upon which such seven banks must use their best efforts to fulfill such request pro rata to their ownership interests. Therefore, we have neither control nor significant influence over UAMCO.

Pursuant to a memorandum of understanding among the Financial Services Commission and seven banks, including ~~us,~~Woori Bank, a private equity fund was established in June 2011 to acquire approximately ￦1.2 trillion ofnon-performing bank loans to construction companies in workout, restructuring or rehabilitation. The general partner of the fund is UAMCO and the limited partners consist of the seven banks and other investors. The fund purchasesnon-performing bank loans at market price and the funds required to purchase such loans are contributed or lent by the same banks that sell such loans to the fund. In June 2011, weWoori Bank agreed to make a capital commitment of ￦148 billion and provide a ￦109 billion revolving loan facility to the fund. From June to December 2011, weWoori Bank contributed the entire amount of ~~our~~its capital commitment to the fund in connection with its purchase of ￦443 billion ofnon-performing loans from ~~us.~~Woori Bank. In 2012, weWoori Bank made an additional capital contribution of ￦44 billion to the fund in connection with its purchase of ￦44 billion ofnon-performing loans from ~~us.~~Woori Bank. We have determined that we have significant influence over the private equity fund.

Under the terms of our sale of loans to UAMCO and the private equity fund, we are not required to repurchase any such loans, provide post-sale price adjustments or otherwise continue to be involved with such loans subsequent to their sale in any material respect. In addition, UAMCO and the private equity fund have the practical ability to sellnon-performing loans in their entirety to unrelated third parties and are able to exercise such ability unilaterally without the need to impose additional restrictions, notwithstanding our ownership interest. Therefore, we believe we have not retained control over the transferred assets, andnon-performing loans sold to UAMCO in ~~2015, 2016~~2017, 2018 and ~~2017~~2019 were derecognized in accordance with ~~International Accounting Standard 39.~~IAS 39 or IFRS 9, as applicable.

Structured companies. We transfernon-performing loans to structured companies, of which we do not have control over the significant operations. Most of the structured companies are investment funds that specialize in acquiringnon-performing loans from Korean financial institutions, including us. In addition, we have not provided any financial guarantees or credit facilities nor invested in any such investment funds. As such, we

believe that we have transferred substantially all of the risks and rewards of the relevantnon-performing loans to the structured companies and have derecognized allnon-performing loans that were transferred to structured companies in ~~2015, 2016~~2017, 2018 and ~~2017.~~2019.

Others. In addition to sales of loans to UAMCO and various structured companies, we sellnon-performing loans to various private investment companies. Pursuant to the terms of such sales to private investment companies, we are not required to repurchase any such loans, provide post-sale price adjustments or otherwise continue to be involved with such loans subsequent to their sale in any material respect.

Allocation and Analysis of Allowances for Credit Losses

The following table presents, as of the dates indicated, the allocation of our allowances for credit losses by loan type:


	As of December 31,																				As of December 31,
	2013⁽¹⁾				2014				2015				2016				2017				2015				2016				2017				2018				2019
	(in billions of Won, except percentages)																				(in billions of Won, except percentages)
Domestic
Corporate
Commercial and industrial	￦	2,336	69.9	%	￦	1,781	68.3	%	￦	1,297	63.2	%	￦	975	52.7	%	￦	893	50.4	%	￦	1,297	63.2	%	￦	975	52.7	%	￦	893	50.4	%	￦	863	48.5	%	￦	684	43.4	%
Lease financing		—	—			—	—			—	—			—	—			1	0.1			—	—			—	—			1	0.1			1	0.1			2	0.1
Trade financing		313	9.4			151	5.8			217	10.6			277	14.9			297	16.8			217	10.6			277	14.9			297	16.8			171	9.6			135	8.6
Other commercial		229	6.9			157	6.0			135	6.6			183	9.8			143	8.0			135	6.6			183	9.8			143	8.0			130	7.3			107	6.8

Total corporate		2,878	86.2			2,089	80.1			1,649	80.4			1,435	77.4			1,334	75.3			1,649	80.4			1,435	77.4			1,334	75.3			1,165	65.5			928	58.9
Consumer
General purpose household⁽²⁾⁽¹⁾		284	8.5			301	11.5			184	9.0			149	8.0			187	10.6			184	9.0			149	8.0			187	10.6			258	14.5			256	16.3
Mortgage		15	0.4			19	0.7			11	0.5			9	0.5			11	0.6			11	0.5			9	0.5			11	0.6			19	1.1			16	1.0

Total consumer		299	8.9			320	12.2			195	9.5			158	8.5			198	11.2			195	9.5			158	8.5			198	11.2			277	15.6			272	17.3
Credit cards		106	3.2			129	4.9			146	7.1			155	8.4			182	10.3			146	7.1			155	8.4			182	10.3			260	14.6			274	17.4

Total domestic		3,283	98.3			2,538	97.2			1,990	97.0			1,748	94.3			1,714	96.8			1,990	97.0			1,748	94.3			1,714	96.8			1,702	95.7			1,474	93.6
Foreign
Corporate
Commercial and industrial		53	1.7			56	2.2			44	2.2			92	5.0			39	2.2			44	2.2			92	5.0			39	2.2			53	3.0			58	3.7
Trade financing		1	—			4	0.2			4	0.2			1	0.1			3	0.2			4	0.2			1	0.1			3	0.2			3	0.2			2	0.1
Other commercial		—	—			—	—			3	0.1			1	0.1			7	0.4			3	0.1			1	0.1			7	0.4			5	0.3			22	1.4

Total corporate		54	1.7			60	2.4			51	2.5			94	5.2			49	2.8			51	2.5			94	5.2			49	2.8			61	3.5			82	5.2
Consumer		—	—			11	0.4			10	0.5			9	0.5			7	0.4			10	0.5			9	0.5			7	0.4			15	0.8			19	1.2

Total foreign		54	1.7			71	2.8			61	3.0			103	5.7			56	3.2			61	3.0			103	5.7			56	3.2			76	4.3			101	6.4

Total allowance for credit losses⁽³⁾⁽²⁾	￦	3,337	100.0	%	￦	2,609	100.0	%	￦	2,051	100.0	%	￦	1,851	100.0	%	￦	1,770	100.0	%	￦	2,051	100.0	%	￦	1,851	100.0	%	￦	1,770	100.0	%	￦	1,778	100.0	%	￦	1,575	100.0	%

⁽¹⁾	~~The amounts as of December 31, 2013 exclude certain former subsidiaries classified as a disposal group held for distribution or sale.~~ Includes home equity loans.

⁽²⁾	~~Includes home equity loans.~~

⁽³⁾	Not including due from banks and other ~~receivables~~financial assets (or other receivables).

The following table presents an analysis of the changes in our allowances for credit losses for each of the years indicated:


	Year ended December 31,															Year ended December 31,
	2013⁽¹⁾			2014			2015			2016			2017			2015			2016			2017			2018⁽⁴⁾			2019⁽⁴⁾
	(in billions of Won)															(in billions of Won)
Balance at the beginning of the period	￦	3,565		￦	3,337		￦	2,609		￦	2,051		￦	1,851
Balance at the beginning of the year⁽¹⁾																￦	2,609		￦	2,051		￦	1,851		￦	2,018		￦	1,778
Bad debt expenses for the period		2,557			1,076			1,029			822			896			1,029			822			896			375			380
Increase on repurchases of non-performing loans		—			—			—			—			—			—			—			—			—			—
Gross charge-offs
Domestic
Corporate
Commercial and industrial		(1,462	)		(1,037	)		(1,016	)		(613	)		(352	)		(1,016	)		(613	)		(352	)		(239	)		(179	)
Lease financing		—			—			—			—			—			—			—			—			—			—
Trade financing		(108	)		(62	)		(82	)		(67	)		(29	)		(82	)		(67	)		(29	)		(26	)		(14	)
Other commercial		(47	)		(68	)		(30	)		(19	)		(39	)		(30	)		(19	)		(39	)		(6	)		(5	)

Total corporate		(1,617	)		(1,167	)		(1,128	)		(699	)		(420	)		(1,128	)		(699	)		(420	)		(271	)		(198	)
Consumer
General purpose household⁽²⁾		(179	)		(113	)		(237	)		(152	)		(143	)		(237	)		(152	)		(143	)		(201	)		(214	)
Mortgage		(1	)		(2	)		(3	)		(3	)		(4	)		(3	)		(3	)		(4	)		(3	)		(3	)

Total consumer		(180	)		(115	)		(240	)		(155	)		(147	)		(240	)		(155	)		(147	)		(204	)		(217	)
Credit cards		(172	)		(163	)		(198	)		(242	)		(228	)		(198	)		(242	)		(228	)		(243	)		(281	)
Total domestic		(1,969	)		(1,445	)		(1,566	)		(1,096	)		(795	)		(1,566	)		(1,096	)		(795	)		(718	)		(696	)
Foreign		(8	)		(7	)		(11	)		(23	)		(37	)		(11	)		(23	)		(37	)		(18	)		(24	)
Allowances relating to loans sold		(161	)		(150	)		(141	)		(115	)		(66	)		(141	)		(115	)		(66	)		(52	)		(45	)

Total gross charge-offs		(2,138	)		(1,602	)		(1,718	)		(1,234	)		(898	)		(1,718	)		(1,234	)		(898	)		(788	)		(765	)
Recoveries:
Domestic
Corporate
Commercial and industrial		140			53			158			153			65			158			153			65			98			54
Lease financing		—			—			—			—			—			—			—			—			—			—
Trade financing		14			6			19			18			6			19			18			6			11			3
Other commercial		13			6			20			21			14			20			21			14			17			6

Total corporate		167			65			197			192			85			197			192			85			126			63
Consumer
General purpose household⁽¹⁾		34			6			16			29			25
General purpose household⁽²⁾																	16			29			25			29			35
Mortgage		8			3			13			25			20			13			25			20			23			27

Total consumer		42			9			29			54			45			29			54			45			52			62
Credit cards		26			28			34			44			51			34			44			51			57			60

Total domestic		235			102			260			290			181			260			290			181			235			185
Foreign		1			1			1			—			1			1			—			1			2			3

Total recoveries		236			103			261			290			182			261			290			182			237			188

Net charge-offs		(1,902	)		(1,499	)		(1,457	)		(944	)		(716	)		(1,457	)		(944	)		(716	)		(551	)		(577	)
Foreign exchange translation effects		(1	)		1			—			1			(3	)		—			1			(3	)		—			2
Others⁽³⁾		(225	)		(306	)		(130	)		(79	)		(258	)		(130	)		(79	)		(258	)		(64	)		(13	)
Adjustment from discontinued operations		(657	)		—			—			—			—
Business combination																	—			—			—			—			5

Balance at the end of the period	￦	3,337		￦	2,609		￦	2,051		￦	1,851		￦	1,770
Balance at the end of the year																	￦2,051			￦1,851			￦1,770			￦1,778			￦1,575

Ratio of net charge-offs during the period to average loans outstanding during the period		1.0	%		0.8	%		0.7	%		0.4	%		0.3	%		0.7	%		0.4	%		0.3	%		0.2	%		0.2	%

⁽¹⁾	~~Includes discontinued operations.~~ The application of IFRS 9 resulted in aone-off increase of ￦248 billion in the opening balance of allowances for loan losses as of January 1, 2018. See Note2-(1)-3)-b) of the notes to our consolidated financial statements.

⁽²⁾	Includes home equity loans.

⁽³⁾	Includes unwinding of discount.

⁽⁴⁾	See Note10-(6) of the notes to our consolidated financial statements for changes in allowance for loan losses according to stages of credit risk deterioration of financial assets.

Loan Charge-Offs

The credit approval process we have implemented includes assessing credit risk before extending loans and monitoring outstanding loans, in order to minimize loans that must be charged off. To the extent charge-offs are required, we followcharge-off policies aimed at maximizing accounting transparency, minimizing any waste of resources in managing loans which have a low probability of being collected and reducing ournon-performing loan ratio.

Loans To Be Charged Off. We charge off loans that are deemed to be uncollectible by virtue of their falling under any of the following categories:

loans for which collection is not foreseeable due to insolvency, bankruptcy, compulsory execution, disorganization, dissolution or the shutting down of the business of the debtor;

loans for which collection is not foreseeable due to the death or disappearance of the debtor;

loans for which expenses of collection exceed the collectable amount;

loans on which collection is not possible through legal or any other means;

payments in arrears in respect of credit cards (excluding credit card loans) that have been overdue for more than four payment cycles and have been classified as estimated loss (excluding instances where there has been partial payment of the overdue balance, where a related balance is not overdue or where a charge off is not possible due to Korean regulations), and those that have beenare overdue for more than six months;

payments outstanding on corporate and consumer loans ~~(other than credit card receivables)~~ that ~~have been~~are overdue for more than 12 ~~months, and those on unsecured consumer loans that have been overdue for more than six~~ months; or

the portion of loans classified as estimated loss, net of any recovery from collateral, which is deemed to be uncollectible.

Procedure forCharge-off Approval. In order to charge off corporate loans, in the case of Woori Bank, an application for acharge-off must be submitted by a branch to the Credit Management and Collection Department promptly and, in any event, within one month after the corporate loan is classified as estimated loss. The department evaluates and approves the application. Then, weWoori Bank must seek an approval from the Financial Supervisory Service for ~~our~~its charge-offs, which is typically granted. At the same time, ~~we refer~~Woori Bank refers the approval of thecharge-off by the Credit Management and Collection Department to ~~our~~its Audit Committee for ~~its~~ review to ensure compliance with ~~our~~its internal procedures for charge-offs, which include consultations with the branch submitting thecharge-off application. Once ~~we receive~~Woori Bank receives approval from the Financial Supervisory Service, weWoori Bank must also obtain approval from ~~our~~its senior management to charge off those loans.

With respect to ~~unsecured~~ consumer loans and credit card balances, we follow a different process to determine which ~~unsecured~~ consumer loans and credit card balances should be ~~charged-off,~~charged off, based on the length of time those loans or balances are past due. We charge off ~~unsecured~~ consumer loans which are 12 months overdue and credit card balances which ~~have been~~are six months overdue ~~for more than four payment cycles~~ and have been classified as estimated ~~loss (excluding instances where there has been partial payment of the overdue balance, where a related balance is not overdue or where a charge off is not possible due to Korean regulations).~~loss.

Treatment of Loans Charged Off. Once loans are charged off, we classify them ascharged-off loans. ~~These~~In the case of Woori Bank, these loans are then transferred to aour wholly-owned subsidiary, Woori Credit Information, ~~that~~which is in charge of collections. It will attempt to recover amounts owed or to sell these loans to third parties.

In the case of collateralized loans, our general policy is to petition a court to foreclose and sell the collateral through a court-supervised auction if a collateralized loan becomes overdue for more than three months. If a debtor still fails to repay and the court grants its approval for foreclosure, we will sell the collateral and recover the principal amount and interest accrued up to the amount of the proceeds from such sale, net of expenses incurred ~~from~~for the ~~auction.~~sale.

Credit Rehabilitation Programs for Delinquent Consumer Borrowers

In light of the rapid increase in delinquencies in credit card and other consumer credit in recent years, and concerns regarding potential social issues posed by the growing number of individuals with bad credit, the Korean government has implemented a number of measures intended to support the rehabilitation of the credit of delinquent consumer borrowers. These measures may affect the amount and timing of our collections and recoveries on our delinquent consumer credits.

In 2002, the Financial Services Commission established the Credit Counseling and Recovery Service based upon an agreement among approximately 160 financial institutions in Korea. Upon application to the Credit Counseling and Recovery Service and approval by creditor financial institutions representing a majority of the outstanding unsecured debt andtwo-thirds of the outstanding secured debt, a qualified “credit delinquent person” with outstanding debts to two or more financial institutions in an aggregate amount not exceeding ￦500 million may participate in an individualwork-out program designed to restructure such person’s debt and rehabilitate such person’s credit. The aggregate amount of ~~our~~ loans of Woori Bank which became subject to such individualwork-out programs in ~~2017~~2019 was ~~￦55~~￦88.2 billion. In ~~2017, we~~2019, Woori Bank recovered approximately ￦5￦8.9 billion with respect to ~~our~~its loans subject to such individualwork-out programs.

Under the Korean Debtor Recovery and Bankruptcy Law, a qualified individual debtor with outstanding debts in an aggregate amount not exceeding threshold amounts of ￦500 million of unsecured debt and/or ￦1 billion of secured debt may restructure his or her debts through a court-supervised debt restructuring that is binding on creditors. The aggregate amount of ~~our~~ loans of Woori Bank which became subject to such court-supervised debt restructuring in ~~2017~~2019 was ~~￦263~~￦330.6 billion. In ~~2017, we~~2019, Woori Bank recovered ~~￦28~~￦48.6 billion with respect to ~~our~~its loans subject to such court-supervised debt restructuring.

In September 2008, to support consumer borrowers with low credit scores, the Financial Services Commission established the Credit Rehabilitation Fund to purchase from creditors the loans of such borrowers that are in default and to provide guarantees so that such loans may be refinanced at lower rates. The Credit Rehabilitation Fund provides support to (i) individuals with low credit scores who are in default on loans not exceeding ￦50 million in principal amount in the aggregate (which requirement will be waived for individuals who are “basic living welfare recipients”) for a period of three months or more and (ii) individuals with low credit scores ranging from category 6 to ~~10 who~~10who are in default on loans not exceeding ￦30 million in principal amount in the aggregate (which requirement will be waived for individuals who are basic living welfare recipients) and the interest rate of which is 30% or more.

In March 2009, the Financial Services Commission requested Korean banks, including ~~us,~~Woori Bank, to establish a ~~“pre-workout~~“pre-workout program,” including a credit counseling and recovery service, for retail borrowers with outstanding short-term debt. Under the pre-workout program, maturity extensions and/or interest rate adjustments are provided to retail borrowers with total loans of less than ￦1.5 billion (consisting of no more than ￦500 million of unsecured loans and ￦1 billion of secured loans) who are in arrears on their payments for more than 30 days but less than 90 days. The aggregate amount of consumer credit ~~(including credit card receivables) we~~Woori Bank provided which became subject to thepre-workout program in ~~2017~~2019 was ~~￦32~~￦43.7 billion. See “Item 3.D. Risk Factors—Risks relating to our consumer credit portfolio—We may experience increases in delinquencies in our consumer loan and credit card portfolios.”

Securities Investment Portfolio

Investment Policy

We invest in and tradeWon-denominated securities and, to a lesser extent, foreign currency-denominated securities for our own account to:

maintain asset stability and diversification;

maintain adequate sources ofback-up liquidity to match funding requirements; and

supplement income from core lending activities.

In making securities investments, we take into account a number of factors, including external broker analyses and internal assessments of macroeconomic trends, industry analysis, credit evaluation, maturity and trading history in determining whether to make a particular investment.

Our investments in debt securities include primarily bonds issued by government-related entities, as well as corporate bonds that have been guaranteed by banks (other than merchant banks), government-related funds or privately capitalized funds that we consider to have a low credit risk.

Our securities investments are subject to various regulations, including limitations prescribed under the Financial Holding Company Act and the Bank Act. Under these regulations, wea financial holding company may not own (i) more than 5% of the total issued and outstanding shares of another finance-related company, (ii) any shares of its affiliates, other than its direct or indirect subsidiaries, or (iii) any shares of anon-finance-related company. In addition, a bank must limit ~~our~~its investments in equity securities and bonds with a maturity in excess of three years (other than monetary stabilization bonds issued by the Bank of Korea and Korean government bonds) to 100% of the sum of ~~our~~its total Tier I and Tier II capital amount (less any capital deductions). ~~We are~~A bank is also generally prohibited from acquiring more than 15% of the shares with voting rights issued by any other ~~corporation. We~~corporation, subject to certain exceptions. Pursuant to the Bank Act, a bank and ~~our~~its trust accounts are prohibited from acquiring the shares of ~~any~~a major shareholder (for the definition of ~~our~~ “major ~~shareholders,~~shareholder,” ~~as defined in~~see “—Supervision and Regulation—Principal Regulations Applicable to Banks—Financial Exposure to Any Individual Customer or Major ~~Shareholder,”~~Shareholder”) of that bank in excess of an amount ~~determined by the Enforcement Decree of the Bank Act within a maximum limit of~~equal to 1% of the sum of ~~our~~the bank’s Tier I and Tier II capital (less any capital deductions). Further information on the regulatory environment governing our investment activities is set out in “—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Liquidity,” “—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Restrictions on Shareholdings in Other Companies,” “—Supervision and Regulation—Principal Regulations Applicable to Banks—Liquidity” and “—Supervision and Regulation—Principal Regulations Applicable to Banks—Restrictions on Shareholdings in Other Companies.”

Our investments in foreign currencies are subject to certain limits and restrictions specified in our internal guidelines relating to country exposure, a single issuer and type of security exposure, and total investments by individual business groups.

Book Value and Fair Value

The following table sets out the book value and fair value of securities in our portfolio as of the dates indicated:


	As of December 31,													As of December 31,
	2015				2016					2017				2017				2018				2019
	Book Value		Fair Value		Book Value		Fair Value			Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value
	(in billions of Won)													(in billions of Won)
Financial assets at fair value through profit and loss
Financial assets held for trading
Financial assets at fair value through profit or loss (IFRS 9/IAS 39)
Financial assets at fair value through profit or loss mandatorily measured at fair value/Financial assets held for trading
Equity securities	￦	63	￦	63	￦	36	￦	36		￦	22	￦	22	￦	22	￦	22	￦	878	￦	878	￦	688	￦	688
Beneficiary certificates		14		14		24		24			13		13		13		13		985		985		1,366		1,366
Others		10		10		4		4			—		—		—		—		—		—		—		—
Debt securities
Korean treasury and government agencies		798		798		519		519			540		540		540		540		516		516		873		873
Financial institutions		1,175		1,175		1,445		1,445			1,477		1,477		1,477		1,477		534		534		600		600
Corporate		644		644		681		681			627		627		627		627		775		775		762		762
Others															—		—		—		—		617		617

Total—Financial assets held for trading	￦	2,704	￦	2,704	￦	2,709	￦	2,709		￦	2,679	￦	2,679
Sub-total														￦	2,679	￦	2,679	￦	3,688	￦	3,688		4,906		4,906

Financial assets designated at FVTPL
Financial assets designated at fair value through profit or loss⁽¹⁾
Debt securities	￦	1	￦	1	￦	4	￦	4		￦	10	￦	10	￦	10	￦	10	￦	—	￦	—	￦	—	￦	—
Equity securities		12		12		13		13			13		13		13		13		—		—		—		—

Total—Financial assets designated at FVTPL	￦	13	￦	13	￦	17	￦	17		￦	23	￦	23
Sub-total															23		23		—		—		—		—

Available-for-sale financial assets
Total														￦	2,702	￦	2,702	￦	3,688	￦	3,688	￦	4,906	￦	4,906

Financial assets at fair value through other comprehensiveincome/Available-for-sale financial assets
Equity securities	￦	1,338	￦	1,338	￦	1,454	￦	1,454		￦	1,411	￦	1,411	￦	1,411	￦	1,411	￦	951	￦	951	￦	935	￦	935
Beneficiary certificates		1,118		1,118		2,822		2,822			713		713		713		713		—		—		—		—
Others		726		726		494		494			170		170		170		170		40		40		81		81
Debt securities
Korean treasury and government agencies		3,559		3,559		3,789		3,789			2,331		2,331		2,331		2,331		1,358		1,358		1,153		1,153
Financial institutions		5,626		5,626		6,314		6,314			5,217		5,217		5,217		5,217		11,253		11,253		17,770		17,770
Corporate		3,888		3,888		4,409		4,409			2,725		2,725		2,725		2,725		1,825		1,825		3,917		3,917
Asset backed securities		258		258		249		249			308		308		308		308		—		—		—		—
Foreign currency bonds		638		638		1,212		1,212			2,443		2,443		2,443		2,443		2,636		2,636		3,875		3,875
Others		20		20		75		75			35		35		35		35		—		—		—		—

Total—Available-for-sale financial assets	￦	17,171	￦	17,171	￦	20,818	￦	20,818		￦	15,353	￦	15,353
Total														￦	15,353	￦	15,353	￦	18,063	￦	18,063	￦	27,731	￦	27,731

Held-to-maturity financial assets
Securities at amortizedcost/Held-to-maturity financial assets
Debt securities
Korean treasury and government agencies	￦	3,367	￦	3,431	￦	3,754	￦	3,774		￦	3,995	￦	3,987	￦	3,995	￦	3,987	￦	7,523	￦	7,575	￦	8,044	￦	8,144
Financial institutions		4,138		4,164		5,169		5,173			7,245		7,233		7,245		7,233		9,475		9,494		6,695		6,737
Corporate		6,021		6,123		4,823		4,874			5,312		5,299		5,312		5,299		5,707		5,732		5,068		5,108
Foreign currency bonds		96		96		164		164			197		197		197		197		234		233		519		524

Total—Held-to-maturity financial assets	￦	13,622	￦	13,814	￦	13,910	￦	13,985	��	￦	16,749	￦	16,716
Total														￦	16,749	￦	16,716	￦	22,939	￦	23,034	￦	20,326	￦	20,513

Total securities	￦	33,510	￦	33,702	￦	37,454	￦	37,529		￦	34,804	￦	34,771	￦	34,804	￦	34,771	￦	44,690	￦	44,785	￦	52,963	￦	53,150

⁽¹⁾

Effective as of January 1, 2018, financial assets designated at fair value through profit or loss have been reclassified as financial assets at fair value through profit or loss mandatorily measured at fair value, pursuant to the application of IFRS 9. See Note2-(1)-3)-a) of the notes to our consolidated financial statements.

Maturity Analysis

The following table categorizes our debt securities by maturity and weighted average yield as of December 31, ~~2017:~~2019:


	As of December 31, 2017																										As of December 31, 2019
	Within 1 year					Over 1 but Within 5 years						Over 5 but Within 10 years					Over 10 years					Total					Within 1 year					Over 1 but Within 5 years					Over 5 but Within 10 years					Over 10 years					Total
	(in billions of Won, except percentages)																										(in billions of Won, except percentages)
	Amount		Weighted Average Yield⁽¹⁾			Amount			Weighted Average Yield⁽¹⁾			Amount		Weighted Average Yield⁽¹⁾			Amount		Weighted Average Yield⁽¹⁾			Amount		Weighted Average Yield⁽¹⁾			Amount		Weighted Average Yield⁽¹⁾			Amount		Weighted Average Yield⁽¹⁾			Amount		Weighted Average Yield⁽¹⁾			Amount		Weighted Average Yield⁽¹⁾			Amount		Weighted Average Yield⁽¹⁾
Financial assets at fair value through profit or loss:
Financial assets held for trading
Financial assets at fair value through profit or loss
Korean treasury and government agencies	￦	151		2.75	%	￦	263			2.07	%	￦	126		2.24	%	￦	—		—	%	￦	540		2.30	%	￦	222		2.07	%	￦	497		1.65	%	￦	154		1.48	%	￦	—		—	%	￦	873		1.72	%
Financial institutions		867		1.51			560			1.77			50		3.06			—		—			1,477		1.66			339		1.55			230		1.59			31		2.23			—		—			600		1.60
Corporate		354		2.55			253			2.46			20		2.99			—		—			627		2.53			573		2.18			189		1.67			—		—			—		—			762		2.05

Total	￦	1,372		1.91	%	￦	1,076			2.00	%	￦	196		2.53	%	￦	—		—	%	￦	2,644		2.00	%

Financial assets designated at fair value through profit or loss
Corporate	￦	—		—	%	￦	10			1.72	%	￦	—		—	%	￦	—		—	%	￦	10		1.72	%
Available-for-sale financial assets								��
Korean treasury and government agencies	￦	1,719		2.38	%	￦	559			2.13	%	￦	49		2.16	%	￦	4		3.39	%	￦	2,331		2.32	%
Financial institutions		3,641		1.66			1,576			1.85			—		—			—		—			5,217		1.72
Corporate		1,917		2.27			718			2.33			90		2.61			—		—			2,725		2.30
Asset backed securities		40		3.01			209			3.16			59		5.09			—		—			308		3.51
Foreign currency bonds		1,007		2.40			1,309			2.20			74		3.30			53		3.87			2,443		2.35

Others		35		2.45			—			—			—		—			—		—			35		2.45			80		1.96			8		4.12			2		0.28			12		1.25			102		2.00

Total	￦	8,359		2.05	%	￦	4,371			2.13	%	￦	272		3.25	%	￦	57		3.84	%	￦	13,059		2.11	%	￦	1,214		1.97	%	￦	924		1.66	%	￦	187		1.59	%	￦	12		1.25	%	￦	2,337		1.81	%

Held-to-maturity financial assets
Financial assets at fair value through other comprehensive income
Korean treasury and government agencies	￦	1,874		2.64	%	￦	2,113			2.15	%	￦	8		4.58	%	￦	—		—	%	￦	3,995		2.38	%	￦	490		2.18	%	￦	580		2.05	%	￦	83		2.00	%	￦	—		—	%	￦	1,153		2.10	%
Financial institutions		4,216		1.59			3,029			1.79			—		—			—		—			7,245		1.68			11,834		1.97			5,936		1.63			—		—			—		—			17,770		1.86
Corporate		1,052		2.88			3,885			2.51			238		2.49			137		1.96			5,312		2.57			2,203		2.38			1,571		1.83			143		2.30			—		—			3,917		2.16
Foreign currency bonds		38		0.64			125			4.35			18		2.78			16		2.89			197		3.39			1,564		0.94			2,127		2.62			121		4.95			63		3.36			3,875		2.02

Total	￦	7,180		2.05	%	￦	9,152			2.21	%	￦	264		2.57	%	￦	153		2.06	%	￦	16,749		2.15	%	￦	16,091		1.93	%	￦	10,214		1.89	%	￦	347		3.15	%	￦	63		3.36	%	￦	26,715		1.94	%

Financial assets at amortized cost
Korean treasury and government agencies																											￦	1,350		2.19	%	￦	6,685		1.98	%	￦	9		3.84	%	￦	—		—	%	￦	8,044		2.01	%
Financial institutions																												2,459		2.03			4,236		2.02			—		—			—		—			6,695		2.03
Corporate																												1,273		2.31			3,147		2.29			465		2.17			183		2.53			5,068		2.30
Foreign currency bonds																												135		2.76			185		3.42			183		2.64			16		3.08			519		2.96

Total																											￦	5,217		2.16	%	￦	14,253		2.08	%	￦	657		2.32	%	￦	199		2.57	%	￦	20,326		2.11	%

⁽¹⁾

The weighted average yield for the portfolio represents the yield to maturity for each individual security, weighted using its book value (which is the amortized cost in the case of ~~held-to-maturity~~ financial assets at amortized cost and the fair value in the case of ~~available-for-sale~~ financial assets at fair value through other comprehensive income and financial assets at fair value through profit or loss).

Risk Concentrations

As of December 31, ~~2017,~~2019, we held the following debt securities of individual issuers where the aggregate book value of those securities exceeded 10% of our owners’ equity at such date. As of December 31, ~~2017,~~2019, our owners’ equity was ~~￦20,366~~￦21,510 billion.


	As of December 31, 2017				As of December 31, 2019
	Book Value		Market Value		Book Value		Market Value
	(in billions of Won)				(in billions of Won)
Name of issuer:
The Korea Development Bank					￦	11,917	￦	11,949
Korean government	￦	6,760	￦	6,751		9,647		9,748
The Bank of Korea		6,610		6,601		6,501		6,503
Industrial Bank of Korea						5,321		5,329
Korea Housing Finance Corporation		3,172		3,159		5,059		5,071
The Korea Development Bank		4,253		4,252

Total	￦	20,795	￦	20,763	￦	38,445	￦	38,600

The Korea Development Bank, The Bank of Korea, Industrial Bank of Korea and Korea Housing Finance Corporation ~~and the Korea Development Bank~~ are Korean government entities.

Funding

We fund our lending and other activities using various sources, both domestic and foreign. Our primary funding strategy is to maintain stable andlow-cost funding. We have in the past achieved this in part by increasing the average balances oflow-cost customer deposits, in particular demand deposits and savings deposits.

Customer deposits are our principal funding source. Customer deposits accounted for ~~82.2% of our total funding as of December 31, 2015, 82.8% of our total funding as of December 31, 2016 and~~ 82.7% of our total funding as of December 31, ~~2017.~~2017, 82.7% of our total funding as of December 31, 2018 and 83.0%of our total funding as of December 31, 2019.

We also acquire funding through the following sources:

long-term debt, including the issuance of senior and subordinated debentures and borrowings from government-affiliated funds and entities and other financial institutions;

short-term borrowings, including borrowings from our trust accounts and from the Bank of Korea, and call money; and

the issuance of hybrid securities, including bond-type hybrid securities.

As of December 31, ~~2017,~~2019, approximately ~~87.5%~~87.1% of our total funding was denominated in Won.

Deposits

Although the majority of our deposits are short-term, it has been our experience that the majority of our depositors generally roll over their deposits at maturity, providing us with a stable source of funding. See “Item 3.D. Risk Factors—Other risks relating to our business—Our funding is highly dependent on short-term deposits, which dependence may adversely affect our operations.” The following table shows the average balances of our deposits and the average costs of our deposits for the periods indicated:


	For the year ended December 31,															For the year ended December 31,
	2015					2016					2017					2017					2018					2019
	Average Balance⁽¹⁾		Average Cost			Average Balance⁽¹⁾		Average Cost			Average Balance⁽¹⁾		Average Cost			Average Balance⁽¹⁾		Average Cost			Average Balance⁽¹⁾		Average Cost			Average Balance⁽¹⁾		Average Cost
	(in billions of Won, except percentages)															(in billions of Won, except percentages)
Demand deposits	￦	8,376		0.51	%	￦	9,742		0.78	%	￦	8,319		0.63	%	￦	8,319		0.63	%	￦	8,512		0.60	%	￦	8,213		0.43	%
Time deposits and savings deposits		168,212		1.53			181,073		1.20			186,277		1.08			186,277		1.08			196,806		1.23			211,732		1.33
Certificates of deposit		1,880		1.91			3,476		1.70			4,553		1.71			4,553		1.71			5,091		2.04			4,760		2.21
Other deposits⁽²⁾		19,294		1.22			23,405		1.05			24,444		0.99			24,444		0.99			26,254		1.31			28,930		1.63

Average total deposits	￦	197,762		1.46	%	￦	217,696		1.17	%	￦	223,593		1.06	%	￦	223,593		1.06	%	￦	236,663		1.23	%	￦	253,635		1.35	%

⁽¹⁾	Average balances are based on daily balances for usWoori Bank and on quarterly balances for all of our other subsidiaries and our structured companies.

⁽²⁾

Mutual installment deposits are interest-bearing deposits offered by us, which enable customers to become eligible to apply for loans secured by such deposits while they maintain an account with us. In order to qualify to apply for such a loan, a customer must make required periodic deposits to the mutual installment account for a contracted term of less than five years. Any such loan will be secured in an amount up to the holder’s mutual installment deposit and will be subject to the same loan underwriting policy we apply for other secured loans. For the portion of the loan, if any, that is not secured, we apply the same loan underwriting policy as we would for other unsecured loans.

For a description of our retail deposit products, see “—Business—Consumer Banking—Lending Activities—Mortgage and Home Equity Lending” and “—Business—Consumer Banking—Deposit-Taking Activities.”

Maturities of Certificates of Deposit and Other Time Deposits

The following table presents, as of December 31, ~~2017,~~2019, the remaining maturities of our certificates of deposit and other time deposits which had fixed maturities in excess of ￦100 million:


	As of December 31, 2017						As of December 31, 2019
	Certificates of Deposit		Other Time Deposits		Total		Certificates of Deposit		Other Time Deposits		Total
	(in billions of Won)						(in billions of Won)
Maturing within three months	￦	1,570	￦	27,067	￦	28,637	￦	403	￦	34,017	￦	34,420
After three but within six months		1,443		22,358		23,801		328		28,073		28,401
After six but within 12 months		1,167		35,314		36,481		216		42,257		42,473
After 12 months		192		3,591		3,783		2		5,023		5,025

Total	￦	4,372	￦	88,330	￦	92,702	￦	949	￦	109,370	￦	110,319

Long-Term Debt

The aggregate amount of contractual maturities of all long-term debt, which consists of debentures and borrowings with original maturities exceeding one year, as of December 31, ~~2017~~2019 was as follows:


	Amount
	(in billions of Won)
Due in ~~2018~~2020	￦	~~12,150~~
~~Due in 2019~~		~~7,970~~
~~Due in 2020~~		~~8,624~~18,821
Due in 2021		~~2,444~~9,063
Due in 2022		~~2,862~~5,479
Due in 2023		3,610
Due in 2024		2,603
Thereafter		~~3,108~~1,747

Gross long-term debt		~~37,158~~41,323
Less: discount		(3025	)

Total long-term debt, net	￦	~~37,128~~41,298

Short-Term Borrowings

The following table presents, for the periods indicated, information regarding our short-term borrowings, with an original maturity of one year or less:


	As of and for the year ended December 31,									As of and for the year ended December 31,
	2015			2016			2017			2017			2018			2019
	(in billions of Won, except percentages)									(in billions of Won, except percentages)
Call money
Year-end balance	￦	2,039		￦	1,927		￦	635		￦	635		￦	975		￦	134
Average balance⁽¹⁾		2,531			1,991			1,527			1,527			1,047			1,197
Maximum balance		3,712			3,250			3,375			3,375			1,540			1,782
Average interest rate⁽²⁾		1.3	%		1.3	%		2.0	%		2.0	%		2.0	%		2.9	%
Year-end interest rate		0.3~5.2	%		0.0~5.1	%		1.5~2.7	%		1.5~2.7	%		0.0~7.3	%		(0.3)~3.5	%
Borrowings from the Bank of Korea⁽³⁾
Year-end balance	￦	1,476		￦	1,599		￦	1,404		￦	1,404		￦	1,335		￦	1,771
Average balance⁽¹⁾		1,335			1,474			1,402			1,402			1,421			1,444
Maximum balance		1,580			1,608			1,457			1,457			1,468			1,771
Average interest rate⁽²⁾		0.7	%		0.7	%		0.7	%		0.7	%		0.7	%		0.6	%
Year-end interest rate		0.5-0.8	%		0.5~0.8	%		0.5~0.8	%		0.5~0.8	%		0.5~0.8	%		0.5~0.8	%
Other short-term borrowings⁽⁴⁾
Year-end balance	￦	7,095		￦	5,974		￦	6,750		￦	6,750		￦	8,087		￦	9,931
Average balance⁽¹⁾		7,078			7,192			7,087			7,087			8,006			10,743
Maximum balance		7,905			9,722			7,694			7,694			8,859			11,913
Average interest rate⁽²⁾		1.5	%		1.3	%		1.4	%		1.4	%		1.8	%		1.8	%
Year-end interest rate		0.2~3.8	%		0.01~2.9	%		0.01~5.0	%		0.01~5.0	%		0.05~6.4	%		(0.3)~8.7	%

⁽¹⁾	Average balances are based on monthly balances.

⁽²⁾	Average interest rates for the year are calculated by dividing the total interest expense by the average amount borrowed.

⁽³⁾	Borrowings from the Bank of Korea generally mature within one month for borrowings in Won and six months for borrowings in foreign currencies.

⁽⁴⁾	Other short-term borrowings include borrowings from trust accounts, bills sold, borrowings in domestic and foreign currency, short-term secured borrowings and foreign currency debentures. Other short-term borrowings have maturities of 30 days to one year and are unsecured.

Supervision and Regulation

Principal Regulations Applicable to ~~Banks~~Financial Holding Companies

General

The Financial Holding Company Act, last amended on December 31, 2018, regulates Korean financial holding companies and their subsidiaries. The entities that regulate and supervise Korean financial holding companies and their subsidiaries are the Financial Services Commission and the Financial Supervisory Service.

The Financial Services Commission exerts direct control over financial holding companies pursuant to the Financial Holding Company Act. Among other things, the Financial Services Commission approves the establishment of financial holding companies, issues regulations on the capital adequacy of financial holding companies and their subsidiaries, and drafts regulations relating to the supervision of financial holding companies.

Following the instructions and directives of the Financial Services Commission, the Financial Supervisory Service supervises and examines financial holding companies and their subsidiaries. In particular, the Financial Supervisory Service sets requirements relating to Korean financial holding companies’ liquidity and capital adequacy ratios and establishes reporting requirements within the authority delegated under the Financial Services Commission regulations. Financial holding companies must submit quarterly reports to the Financial Supervisory Service discussing business performance, financial status and other matters identified in the Enforcement Decree of the Financial Holding Company Act.

Under the Financial Holding Company Act, a financial holding company is a company which primarily engages in controlling its subsidiaries by holding equity stakes in them equal in aggregate to at least 50% of the financial holding company’s aggregate assets based on its balance sheet as of the end of the immediately preceding fiscal year. A company is required to obtain approval from the Financial Services Commission to become a financial holding company.

A financial holding company may engage only in controlling the management of its subsidiaries, as well as certain ancillary activities including:

financially supporting its direct and indirect subsidiaries;

raising capital necessary for investment in its subsidiaries or providing financial support to its direct and indirect subsidiaries;

supporting the business of its direct and indirect subsidiaries, including the development and marketing of financial products;

providing data processing, legal, accounting and other resources and services that have been commissioned by its direct and indirect subsidiaries so as to support their operations; and

any other businesses exempted from authorization, permission or approval under the applicable laws and regulations.

The Financial Holding Company Act requires every financial holding company (other than a financial holding company that is controlled by another financial holding company) and its subsidiaries to obtain prior approval from the Financial Services Commission before acquiring control of another company or to file a report with the Financial Services Commission within 30 days thereafter in certain cases (including acquiring control of another company whose assets are less than ￦100 billion as of the end of the immediately preceding fiscal year). In addition, the Financial Services Commission must grant permission to liquidate or to merge with any other company before the liquidation or merger. A financial holding company must report to the Financial Services Commission when certain events, including the following, occur:

when the largest shareholder changes;

in the case of a bank holding company, when a major investor changes;

when the shareholding of the controlling shareholder (i.e., the “largest shareholder” or a “principal shareholder,” each as defined in the Financial Holding Company Act) or a person who has a “special relationship” with such controlling shareholder (as defined in the Enforcement Decree of the Financial Holding Company Act) changes by 1% or more of the total issued and outstanding voting shares of the financial holding company;

when it changes its corporate name;

when there is a cause for its dissolution; and

when it or its subsidiaries cease to control any of their respective direct or indirect subsidiaries by disposing of their shares of such direct or indirect subsidiary.

Capital Adequacy

The Financial Holding Company Act does not provide for a minimumpaid-in capital requirement related to financial holding companies. However, all financial holding companies are required to maintain a specified level of solvency. In addition, with respect to the allocation of net profit earned in a fiscal term, a financial holding company must set aside in its legal reserve an amount equal to at least 10% of its net income after tax each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of itspaid-in capital.

A bank holding company, which is a financial holding company controlling banks or other financial institutions conducting banking business as prescribed in the Financial Holding Company Act, is required to maintain a total minimum consolidated capital adequacy ratio of 11.5% (including applicable additional capital

buffers and requirements as described below). “Consolidated capital adequacy ratio” is defined as the ratio of equity capital as a percentage ofrisk-weighted assets on a consolidated basis, determined in accordance with the Financial Services Commission requirements that have been formulated based on Bank of International Settlements, or BIS, standards. “Equity capital,” as applicable to bank holding companies, is defined as the sum of common equity Tier I capital, additional Tier I capital and Tier II capital less any deductible items, each as defined under the Regulation on the Supervision of Financial Holding Companies.“Risk-weighted assets” is defined as the sum of creditrisk-weighted assets and marketrisk-weighted assets.

Pursuant to amended regulations promulgated by the Financial Services Commission commencing in 2013 to implement Basel III, Korean bank holding companies were required to maintain a minimum ratio of common equity Tier I capital torisk-weighted assets of 3.5% and Tier I capital torisk-weighted assets of 4.5% from December 1, 2013, which minimum ratios were increased to 4.0% and 5.5%, respectively, from January 1, 2014 and increased further to 4.5% and 6.0%, respectively, from January 1, 2015. Such requirements are in addition to thepre-existing requirement for a minimum ratio of Tier I and Tier II capital (less any capital deductions) torisk-weighted assets of 8.0%, which remains unchanged. The amended regulations also require an additional capital conservation buffer of 2.5%, as well as a potential counter-cyclical capital buffer of up to 2.5%, which is determined on a quarterly basis by the Financial Services Commission.Furthermore, bank holding companies designated as domestic systemically important banks for 2020 by the Financial Services Commission are subject to an additional capital requirement of 1.0%.

Liquidity

All financial holding companies are required to match the maturities of their assets and liabilities on anon-consolidated basis in accordance with the Financial Holding Company Act in order to ensure liquidity. Financial holding companies must:

maintain a Won liquidity ratio (defined as Won assets due within one month, including marketable securities, divided by Won liabilities due within one month) of not less than 100% on anon-consolidated basis;

maintain a foreign currency liquidity ratio (defined as foreign currency liquid assets due within three months divided by foreign currency liabilities due within three months) of not less than 80% on anon-consolidated basis (except that such requirement is not applicable to a financial holding company whose foreign currency liabilities constitute less than 1% of its total assets);

maintain a ratio of foreign currency liquid assets due within seven days less foreign currency liabilities due within seven days as a percentage of total foreign currency assets of not less than 0% on anon-consolidated basis (except that such requirement is not applicable to a financial holding company whose foreign currency liabilities constitute less than 1% of its total assets);

maintain a ratio of foreign currency liquid assets due within a month less foreign currency liabilities due within a month as a percentage of total foreign currency assets of not less than negative 10% on anon-consolidated basis (except that such requirement is not applicable to a financial holding company whose foreign currency liabilities constitute less than 1% of its total assets); and

make quarterly reports regarding their Won liquidity and foreign currency liquidity to the Financial Supervisory Service.

Financial Exposure to Any Individual Customer and Major Investor

Subject to certain exceptions, the aggregate credit (as defined in the Financial Holding Company Act, the Bank Act, the Financial Investment Services and Capital Markets Act, the Insurance Business Act, the Mutual Savings Bank Act and the Specialized Credit Financial Business Act, respectively) of a financial holding company and its direct and indirect subsidiaries that are banks, merchant banks, financial investment companies, insurance companies, savings banks or specialized credit financial business companies (which we refer to as

“Financial Holding Company Total Credit”) to a single group of companies that belong to the same conglomerate as defined in the Monopoly Regulations and Fair Trade Act will not be permitted to exceed 25% of net aggregate equity capital (as defined below).

“Net aggregate equity capital” is defined under the Enforcement Decree of the Financial Holding Company Act as the sum of:

(1)

in case of a financial holding company, the capital amount as defined in Article24-3(7), Item 2 of the Enforcement Decree of the Financial Holding Company Act;

(2)

in case of a bank, the capital amount as defined in Article 2(1), Item 5 of the Bank Act;

(3)

in case of a merchant bank, the capital amount as defined in Article 342(1) of the Financial Investment Services and Capital Markets Act;

(4)

in case of a financial investment company, the capital amount as defined in Article 37(3) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act;

(5)

in case of an insurance company, the capital amount as defined in Article 2, Item 15 of the Insurance Business Act;

(6)

in case of a savings bank, the capital amount as defined in Article 2, Item 4 of the Mutual Savings Bank Act; and

(7)

in case of a specialized credit financial business company, the capital amount as defined in Article 2, Item 19 of the Specialized Credit Financial Business Act;

less the sum of:

(1)

the amount of shares of direct and indirect subsidiaries held by the financial holding company;

(2)

the amount of shares that arecross-held by each direct and indirect subsidiary that is a bank, merchant bank, financial investment company, insurance company, savings bank or specialized credit financial business company; and

(3)

the amount of shares of a financial holding company held by such direct and indirect subsidiaries that are banks, merchant banks, financial investment companies, insurance companies, savings banks or specialized credit financial business companies.

The Financial Holding Company Total Credit to a single individual or judicial person may not exceed 20% of the net aggregate equity capital. In addition, the Financial Holding Company Total Credit to a shareholder holding (together with the persons who have a “special relationship” with the shareholder, as defined in the Enforcement Decree of the Financial Holding Company Act) in aggregate more than 10% of the total issued and outstanding voting shares of a financial holding company generally may not exceed the lesser of (x) 25% of the net aggregate equity capital and (y) the amount of the equity capital of the financial holding company multiplied by the shareholding ratio of the shareholder (together with the persons who have a special relationship with the shareholder).

Further, the total sum of credits (as defined in the Financial Holding Company Act, the Bank Act, the Financial Investment Services and Capital Markets Act, the Insurance Business Act, the Mutual Savings Bank Act and the Specialized Credit Financial Business Act, respectively) of a bank holding company and its direct and indirect subsidiaries that are banks, merchant banks, financial investment companies, insurance companies, savings banks or specialized credit financial business companies as applicable (which we refer to as “Bank Holding Company Total Credit”) extended to a “major investor” (as defined below) (together with the persons who have a special relationship with that major investor) will not be permitted to exceed the lesser of (x) 25% of the net aggregate equity capital and (y) the amount of the equity capital of the bank holding company multiplied by the shareholding ratio of the major investor, except for certain cases.

“Major investor” is defined as:

a shareholder holding (together with persons who have a special relationship with that shareholder), in excess of 10% (or in the case of a bank holding company controlling regional banks only, 15%) in the aggregate of the bank holding company’s total issued and outstanding voting shares; or

a shareholder holding (together with persons who have a special relationship with that shareholder), more than 4% in the aggregate of the total issued and outstanding voting shares of the bank holding company controlling nationwide banks, where the shareholder is the largest shareholder or has actual control over the major business affairs of the bank holding company through, for example, appointment and dismissal of the officers pursuant to the Enforcement Decree of the Financial Holding Company Act.

In addition, the total sum of the Bank Holding Company Total Credit granted to all of a bank holding company’s major investor must not exceed 25% of the bank holding company’s net aggregate equity capital. Furthermore, any bank holding company that, together with its direct and indirect subsidiaries, intends to extend credit to the bank holding company’s major investor in an amount equal to or exceeding the lesser of (x) the amount equivalent to 0.1% of the net aggregate equity capital and (y) ￦5 billion, in any single transaction, must obtain prior unanimous board resolutions and then, immediately after providing the credit, must file a report to the Financial Services Commission and publicly disclose the filing of the report.

Restrictions on Transactions Among Direct and Indirect Subsidiaries and Financial Holding Company

Generally, a direct or indirect subsidiary of a financial holding company may not extend credits (excluding the amount of corporate credit card payments issued by a direct or indirect subsidiary of a financial holding company that is engaged in the banking business) to that financial holding company. In addition, a direct or indirect subsidiary of a financial holding company may not extend credits (excluding the amount of corporate credit card payments issued by a direct or indirect subsidiary of a financial holding company that is engaged in the banking business) to other direct or indirect subsidiaries of the financial holding company in excess of 10% of its capital amount on an individual basis or to those subsidiaries in excess of 20% of its capital amount on an aggregate basis. The subsidiary extending the credit must also obtain an adequate level of collateral depending on the type of such collateral from the other subsidiaries unless the credit is otherwise approved by the Financial Services Commission. The adequate level of collateral for each type of collateral is as follows:

(1)

for deposits and installment savings, obligations of the Korean government or the Bank of Korea, obligations guaranteed by the Korean government or the Bank of Korea, obligations secured by securities issued or guaranteed by the Korean government or the Bank of Korea, 100% of the credit extended;

(2)

for obligations of municipal governments under the Local Autonomy Act, local public enterprise under the Local Public Enterprises Act and investment institutions and otherquasi-investment institutions under the Basic Act on the Management ofGovernment-Invested Institution or for obligations guaranteed by, or secured by the securities issued or guaranteed by, the aforementioned entities pursuant to the relevant regulations, 110% of the credit extended; and

(3)

for any property other than those set forth in paragraphs (1) and (2) above, 130% of the credit extended.

Subject to certain exceptions, a direct or indirect subsidiary of a financial holding company is prohibited from owning the shares of any other direct or indirect subsidiaries (other than those directly controlled by that direct or indirect subsidiary) under the common control of the financial holding company.

Subject to certain exceptions, a direct or indirect subsidiary of a financial holding company is also prohibited from owning the shares of the financial holding company controlling that direct or indirect subsidiary. The transfer of certain assets classified as precautionary or below between a financial holding company and its

direct or indirect subsidiary or between the direct and indirect subsidiaries of a financial holding company is prohibited except for:

(1)

transfers to a special purpose company, or entrustment with a trust company, for anasset-backed securitization transaction under theAsset-Backed Securitization Act;

(2)

transfers to amortgage-backed securities issuance company for a mortgage securitization transaction;

(3)

transfers orin-kind contributions to a corporate restructuring vehicle under the Corporate Restructuring Investment Companies Act; and

(4)

transfers to a corporate restructuring company under the Industry Promotion Act.

Disclosure of Management Performance

For the purpose of protecting the depositors and investors in the subsidiaries of financial holding companies, the Financial Services Commission requires financial holding companies to disclose certain material matters including:

(1)

financial condition and profit and loss of the financial holding company and its direct and indirect subsidiaries;

(2)

fund-raising by the financial holding company and its direct and indirect subsidiaries and the appropriation of such funds;

(3)

any sanctions levied on the financial holding company and its direct and indirect subsidiaries under the Financial Holding Company Act or any corrective measures or sanctions under the Law on Improvement of Structure of Financial Industry; and

(4)

occurrence of anynon-performing assets or financial incident that may have a material adverse effect, or any other event as prescribed in the applicable regulations.

Restrictions on Shareholdings in Other Companies

Generally, a financial holding company may not own (i) more than 5% of the total issued and outstanding shares of anotherfinance-related company, (ii) any shares of its affiliates, other than its direct or indirect subsidiaries or (iii) any shares of anon-finance-related company.

Restrictions on Shareholdings by Direct and Indirect Subsidiaries

Generally, a direct subsidiary of a financial holding company may not control any other company other than, as an indirect subsidiary of the financial holding company:

financial institutions established in foreign jurisdictions;

certain financial institutions which are engaged in any business that the direct subsidiary may conduct without any licenses or permits;

certain financial institutions whose business is related to the business of the direct subsidiary as described by the Enforcement Decree of the Financial Holding Company Act (for example, a bank subsidiary may control only credit information companies, credit card companies and financial investment companies with a dealing, brokerage, collective investment, investment advice, discretionary investment management and/or trust license);

certain financial institutions whose business is related to the financial business as prescribed by the regulations of the Ministry of Economy and Finance; and

certain companies which are not financial institutions but whose business is related to the financial business of the financial holding company as prescribed by the Enforcement Decree of the Financial Holding Company Act (for example, afinance-related research company or afinance-related information technology company).

Acquisition of such indirect subsidiaries by direct subsidiaries of a financial holding company requires prior permission from the Financial Services Commission or the submission of a report to the Financial Services Commission, depending on the types of the indirect subsidiaries and the amount of total assets of the indirect subsidiaries.

Subject to certain exceptions, an indirect subsidiary of a financial holding company may not control any other company. If an indirect subsidiary of a financial holding company had control over another company at the time it became such an indirect subsidiary, the indirect subsidiary is required to dispose of its interest in the other company within two years from such time.

Restrictions on Transactions between a Bank Holding Company and its Major Investor

A bank holding company and its direct and indirect subsidiaries may not acquire (including through their respective trust accounts) shares issued by the bank holding company’s major investor in excess of 1% of the net aggregate equity capital (as defined above). In addition, if those entities intend to acquire shares issued by that major investor in any single transaction equal to or exceeding the lesser of (x) the amount equivalent to 0.1% of the net aggregate equity capital and (y) ￦5 billion, that entity must obtain prior unanimous board resolutions and then, immediately after the acquisition, file a report to the Financial Services Commission and publicly disclose the filing of the report.

Restrictions on Ownership of a Financial Holding Company

Under the Financial Holding Company Act, a financial institution generally may not control a financial holding company. In addition, any single shareholder and persons who have a special relationship with that shareholder may acquire beneficial ownership of up to 10% of the total issued and outstanding shares with voting rights of a bank holding company that controls nationwide banks or 15% of the total issued and outstanding shares with voting rights of a bank holding company that controls only regional banks, subject to certain exceptions. Among others, the Korean government and the Korea Deposit Insurance Corporation are not subject to this limit.“Non-financial business group companies” (as defined below), however, may not acquire the beneficial ownership of shares of a bank holding company controlling nationwide banks in excess of 4% of that bank holding company’s outstanding voting shares unless they obtain the approval of the Financial Services Commission and agree not to exercise voting rights in respect of shares in excess of the 4% limit, in which case they may acquire beneficial ownership of up to 10%. Any other person (whether a Korean national or a foreign investor) may acquire no more than 10% of total voting shares issued and outstanding of a bank holding company controlling nationwide banks unless they obtain approval from the Financial Services Commission in each instance where the total holding will exceed 10% (or 15% in the case of a bank holding company controlling only regional banks), 25% or 33% of the total voting shares issued and outstanding of that bank holding company controlling nationwide banks.

Furthermore, in the case where a person (including Korean and foreign investors, but excluding certain persons prescribed under the Enforcement Decree of the Financial Holding Company Act) (i) acquires in excess of 4% of the total issued and outstanding voting shares of any bank holding company (other than a bank holding company controlling only regional banks), (ii) becomes the largest shareholder of such bank holding company in which such person has acquired in excess of 4% of the total issued and outstanding voting shares, (iii) changes its shareholding in such bank holding company, in which it has acquired in excess of 4% of the total issued and outstanding voting shares, by 1% or more of the total issued and outstanding voting shares of such bank holding company or (iv) is a private equity fund or an investment purpose company holding in excess of 4% of the total outstanding voting shares of a bank holding company and changes its members or shareholders, such person must file a report on such change with the Financial Services Commission (x) in case of (i) and (iii), by the last day of the month following the month in which such change occurred, or (y) in case of (ii) and (iv), within ten days after the end of the month in which such change occurred.

“Non-financial business group companies” as defined under the Financial Holding Company Act include:

(1)

any same shareholder group where the aggregate net assets of allnon-financial business companies belonging to that group equals or exceeds 25% of the aggregate net assets of all members of that group;

(2)

any same shareholder group where the aggregate assets of allnon-financial business companies belonging to that group equals or exceeds ￦2 trillion;

(3)

any mutual fund where a same shareholder group identified in (1) or (2) above beneficially owns and/or exercises the voting rights of more than 4% of the total issued and outstanding voting shares of that mutual fund;

(4)

any private equity fund (a) where a person falling under any of items (1) through (3) above is a limited partner holding not less than 10% of the total amount of contributions to the private equity fund, or (b) where a person falling under any of items (1) through (3) above is a general partner, or (c) where the total equity of the private equity fund acquired by each affiliate belonging to several enterprise groups subject to the limitation on mutual investment is 30% or more of the total amount of contributions to the private equity fund; or

(5)

the investment purpose company concerned, where a private equity fund falling under item (4) above acquires or holds stocks in excess of 4% of the stock or equity of such company or exercises de facto control over significant managerial matters of such company through appointment or dismissal of executives or in any other manner.

Sharing of Customer Information among Financial Holding Company and its Subsidiaries

Under the Act on Use and Protection of Credit Information, any individual customer’s credit information must be disclosed or otherwise used by financial institutions only to determine, establish or maintain existing commercial transactions with them and only after obtaining written consent to use that information. In addition, under the Act on Real Name Financial Transactions and Confidentiality, an individual working at a financial institution may not provide or reveal information or data concerning the contents of financial transactions to other persons unless such individual receives a request or consent in writing from the holder of a title deed, except under certain exceptions stipulated in the Act. Under the Financial Holding Company Act, a financial holding company and its direct and indirect subsidiaries, however, may share certain credit information of individual customers among themselves for internal management purposes outlined in the Enforcement Decree of the Financial Holding Company Act (such as credit risk management, internal control and customer analysis), without the customers’ written consent, subject to the methods and procedures for provision of such information set forth therein. A subsidiary financial investment company with a dealing and/or brokerage license of a financial holding company may provide that financial holding company and its other direct and indirect subsidiaries information relating to the aggregate amount of cash or securities that a customer of the financial investment company with a dealing and/or brokerage license has deposited, for internal management purposes outlined in the Enforcement Decree of the Financial Holding Company Act, subject to the methods and procedures for provision of such information set forth therein. Recent amendments to the Financial Holding Company Act, which became effective on November 29, 2014, limit the scope of credit information that may be shared without the customers’ prior consent and require certain procedures for provision of customer information as prescribed by the Financial Services Commission. Beginning in November 29, 2014, notice must be given to customers at least once a year regarding (i) the provider of customer information, (ii) the recipient of customer information, (iii) the purpose of providing the information and (iv) the categories of the information provided.

Principal Regulations Applicable to Banks

The banking system in Korea is governed by the Bank Act ~~of 1950, as amended~~ and the Bank of Korea Act of 1950, as amended. In addition, Korean banks are subject to the regulations and supervision of the Bank of Korea, the Monetary Policy Committee of the Bank of Korea, the Financial Services Commission and its executive body, the Financial Supervisory Service.

The Bank of Korea, established in June 1950 under the Bank of Korea Act, performs the customary functions of a central bank. It seeks to contribute to the sound development of the national economy by price stabilization through establishing and implementing efficient monetary and credit policies with a focus on financial stability. The Bank of Korea acts under instructions of the Monetary Policy Committee, the supreme policy-making body of the Bank of Korea.

Under the Bank of Korea Act, the Monetary Policy Committee’s primary responsibilities are to formulate monetary and credit policies and to determine the operations, management and administration of the Bank of Korea.

The Financial Services Commission, established onin April 1, 1998, regulates commercial banks pursuant to the Bank Act, including establishing guidelines on capital adequacy of commercial banks, and promulgates regulations relating to supervision of banks. Furthermore, the Financial Services Commission regulates market entry into the banking business.

The Financial Supervisory Service, established onin January 2, 1999, is subject to the instructions and directives of the Financial Services Commission and carries out supervision and examination of commercial banks. In particular, the Financial Supervisory Service sets requirements both for the prudent control of liquidity and for capital adequacy and establishes reporting requirements pursuant to the authority delegated to it under the Financial Services Commission regulations, pursuant to which banks are required to submit annual reports on financial performance and shareholdings, regular reports on management strategy andnon-performing loans, including write-offs, and management of problem companies and plans for the settlement of bad loans.

Under the Bank Act, approval to commence a commercial banking business or a long-term financing business must be obtained from the Financial Services Commission. Commercial banking business is defined as the lending of funds acquired predominantly from the acceptance of demand deposits for a period not exceeding one year or subject to the limitation established by the Financial Services Commission, for a period between one year and three years. Long-term financing business is defined as the lending, for periods in excess of one year, of funds acquired predominantly frompaid-in capital, reserves or other retained earnings, the acceptance of time deposits with maturities of at least one year, or the issuance of debentures or other bonds. A bank wishing to enter into any business other than commercial banking and long-term financing businesses, such as ~~the~~a trust business, must obtain approval from the Financial Services Commission. Approval to merge with any other banking institution, to liquidate, to spin off, toor close a banking business or to transfer all or a part of a business must also be obtained from the Financial Services Commission.

If the Financial Services Commission deems a bank’s financial condition to be unsound or if a bank fails to meet the applicable capital adequacy ratio set forth under Korean law, the Financial Services Commission may order:

admonitions or warnings with respect to its officers;

capital increases or reductions;

assignments of contractual rights and obligations relating to financial transactions;

a suspension of performance by its officers of their duties and the appointment of receivers;

disposals of property holdings or closures of subsidiaries or branch offices or downsizing;

stock cancellations or consolidations;

mergers with other financial institutions;

acquisition of such bank by a third party; and/or

suspensions of a part or all of its business ~~operations.~~operations for not more than six months.

Capital Adequacy

The Bank Act requires nationwide banks, such as us, to maintain a minimumpaid-in capital of ￦100 billion and regional banks to maintain a minimumpaid-in capital of ￦25 billion. All banks, including foreign bank branches in Korea, are also required to maintain a prescribed solvency position. A bank must also set aside in its legal reserve an amount equal to at least 10% of the net income after tax each time it pays dividends on net profits earned until its legal reserve reaches at least the aggregate amount of itspaid-in capital.

Under the Detailed Regulation on the Supervision of the Banking Business, the capital of a bank is divided into two categories, Tier I and Tier II capital. Tier I capital (core capital) consists of (i) ~~Tier I~~ common equity Tier I

capital, includingpaid-in capital, capital surplus and retained earnings related to common equity and accumulated other comprehensive gains and losses, and (ii) additional Tier I capital, includingpaid-in capital and capital surplus related to hybrid Tier I capital instruments that, among other things, qualify as contingent capital and are subordinated to subordinated debt. Tier II capital (supplementary capital) consists of, among other things, capital and capital surplus from the issuance of Tier II capital instruments, allowances for loan losses on loans classified as “normal” or “precautionary,” subordinated debt and other capital securities which meet the standards prescribed by the governor of the Financial Supervisory Service under Article 26(2) of the Regulation on the Supervision of the Banking Business.

All banks must meet minimum ratios of Tier I and Tier II capital (less any capital deductions) to risk-weighted assets, determined in accordance with Financial Services Commission requirements that have been formulated based on BIS standards. These requirements were adopted and became effective in 1996, and were amended effective January 1, 2008 upon the implementation by the Financial Supervisory Service of Basel II. Under such requirements, all domestic banks and foreign bank branches ~~must~~are required to meet a minimum ratio of Tier I and Tier II capital (less any capital deductions) to risk-weighted assets of 8.0%. Commencing in July 2013, the Financial Services Commission promulgated a series of amended regulations implementing Basel III, ~~in Korea,~~ pursuant to which Korean banks and bank holding companies were required to maintain a minimum ratio of common equity Tier I ~~common equity~~ capital to risk-weighted assets of 3.5% and Tier I capital to risk-weighted assets of 4.5% from December 1, 2013, which minimum ratios were increased to 4.0% and 5.5%, respectively, from January 1, 2014 and increased further to 4.5% and 6.0%, respectively, from January 1, 2015. Such requirements are in addition to the pre-existing requirement for a minimum ratio of Tier I and Tier II capital (less any capital deductions) to risk-weighted assets of 8.0%, which remains unchanged. The amended regulations also require an additional capital conservation buffer of ~~1.25% in 2017 and 1.875% in 2018, with such buffer to increase to~~ 2.5% in 2019 and 2020, as well as a potential counter-cyclical capital buffer of up to 2.5%, which is determined on a quarterly basis by the Financial Services Commission. Furthermore, we were designated as one of six domestic systemically important banks for 2017 by the Financial Services Commission and were subject to an additional capital requirement of 0.5% in 2017. In June 2017, we were againWoori Bank was designated as a domestic systemically important bank for ~~2018, which would~~2019 by the Financial Services Commission and was subject us to an additional capital requirement of ~~0.75% in 2018, with such potential requirement to increase to~~ 1.0% in ~~2019.~~2019.In June 2019, we and Woori Bank were each designated as a domestic systemically important bank holding company and a domestic systemically important bank, respectively, for 2020, which subjects us and Woori Bank to the additional capital requirement of 1.0% in 2020.

Under the Detailed Regulation on the Supervision of the Banking Business, the following risk-weight ratios must be applied by Korean banks in respect of home mortgage loans:

(1)

for those banks which adopted a standardized approach for calculating credit risk capital requirements, a risk-weight ratio of 35% (only in the case where the loan is fully secured by a first ranking mortgage) and, with respect to high-risk home mortgage loans, 50% or 70%; and

(2)

for those banks which adopted an internal ratings-based approach for calculating credit risk capital requirements, a risk-weight ratio calculated with reference to the probability of default, loss given default and exposure at default, each as defined under the Detailed Regulation on the Supervision of the Banking Business.

Liquidity

All banks are required to ensure adequate liquidity by matching the maturities of their assets and liabilities in accordance with the Regulation on the Supervision of the Banking Business. Banks may not invest an amount exceeding 100% of their Tier I and Tier II capital (less any capital deductions) in equity securities and certain other securities with a redemption period of over three years. This stipulation does not apply to Korean government bonds, Monetary Stabilization Bonds issued by the Bank of Korea or debentures and stocks referred to in items 1 and 2, respectively, of paragraph (6) of Article 11 of the Act on the Improvement of the Structure of the Financial Industry. The Financial Services Commission uses the liquidity coverage ratio as the principal liquidity risk management measure, and currently requires each Korean bank to:

maintain a liquidity coverage ratio (defined as the ratio of highly liquid assets to total net cash outflows over a30-day period) of not less than ~~95%, from January 1, 2018 until December 31, 2018, with such minimum liquidity coverage ratio to increase to~~ 100% ~~in 2019;~~;

maintain a foreign currency liquidity coverage ratio of not less than 80% (temporarily reduced to 70% ~~from January 1, 2018 until December 31, 2018, with such minimum~~for the three months ending May 30, 2020 for purposes of increasing foreign currency liquidity ~~coverage ratio to increase to 80%~~ in ~~2019; provided, however, that~~ the foreign currency liquidity ratio (defined as the ratio of foreign currency assets due within three months to foreign currency liabilities due within three months) would apply if the amount of foreign currency assetsKorean financial markets); and the ratio of foreign currency liabilities to total liabilities are less than the respective amount and ratio, or in certain other cases, specified under the Bank Act and the regulations thereunder; and

submit monthly reports with respect to the maintenance of these ratios.

The Monetary Policy Committee of the Bank of Korea is empowered to fix and alter minimum reserve requirements that banks must maintain against their deposit liabilities. The current minimum reserve ratios are:

7% of average balances for Won currency demand deposits outstanding;

0% of average balances for Won currency employee asset establishment savings deposits, employee long-term savings deposits, employee house purchase savings deposits, long-term house purchase savings deposits, household long-term savings deposits and employee preferential savings deposits outstanding (with respect to employee-related deposits, only if such deposits were made ~~before~~prior to February 28, 2013); and

2% of average balances for Won currency time deposits, installment savings deposits, mutual installments, housing installments and certificates of deposit outstanding.

For foreign currency deposit liabilities, a 2% minimum reserve ratio is applied to time deposits with a maturity of one month or longer, certificates of deposit with a maturity of 30 days or longer and savings deposits with a maturity of six months or longer and a 7% minimum reserve ratio is applied to other deposits. A 1% minimum reserve ratio applies to deposits in offshore accounts, immigrant accounts and resident accounts opened by foreign exchange banks as well as foreign currency certificates of deposit held by account holders of such offshore accounts, immigrant accounts and resident accounts opened by foreign exchange banks.

Furthermore, under the Regulation on the Supervision of the Banking Business, ~~we are~~Woori Bank is required to maintain a minimum ~~“mid-~~“mid- to long-term foreign exchange funding ratio” of 100%. ~~“Mid-to~~“Mid-to long term foreign exchange funding ratio” refers to the ratio of (1) the total outstanding amount of foreign exchange borrowing with a maturity of more than one year to (2) the total outstanding amount of foreign exchange lending with a maturity of one year or more.

Amendments Relating to Net Stable Funding Ratio and Leverage Ratio Requirements

Effective January 31, 2018, the Financial Services Commission implemented amendments to the Regulation on Supervision of the Banking Business, ~~that~~which impose certain liquidity- and leverage-related ratio requirements on banks in Korea, in accordance with Basel III. Pursuant to ~~these~~such amendments, each Korean bank is required to:

maintain a net stable funding ratio (defined as the ratio of the available amount of stable funding to the required amount of stable funding) of not less than 100%, where (i) the available amount of stable funding generally refers to the portion of liabilities and capital expected to be reliable over aone-year time horizon and (ii) the required amount of stable funding generally refers to the portion of assets requiring stable funding over a time horizon of one year or longer, each as calculated in accordance with the Detailed Regulation on Supervision of the Banking Business;

maintain a leverage ratio (defined as the ratio of core capital to total exposures) of not less than 3%, where (i) core capital includespaid-in capital, capital surplus, retained earnings and hybrid Tier I capital instruments and (ii) total exposures includeon-balance sheet exposures andoff-balance sheet exposures, each as calculated in accordance with the Detailed Regulation on Supervision of the Banking Business; and

submit monthly reports with respect to the maintenance of these ratios.

Financial Exposure to Any Individual Customer or Major Shareholder

Under the Bank Act, subject to certain exceptions, the sum of large exposures by a bank—in other words, the total sum of its credits to single individuals, juridical persons or business groups that exceed 10% of the sum

of Tier I and Tier II capital (less any capital deductions)—generally must not exceed five times the sum of Tier I and Tier II capital (less any capital deductions). In addition, subject to certain exceptions, banks generally may not extend credit (including loans, guarantees, purchases of securities (only in the nature of a credit) and any other transactions that directly or indirectly create credit risk) in excess of 20% of the sum of Tier I and Tier II capital (less any capital deductions) to a single individual or juridical person, or grant credit in excess of 25% of

the sum of Tier I and Tier II capital (less any capital deductions) to a single group of companies as defined in the Monopoly Regulations and Fair Trade Act.

The Bank Act also provides for certain restrictions on extending credits to a major shareholder. A “major shareholder” is defined as:

a shareholder holding (together with persons who have a special relationship with that shareholder) in excess of 10%; (or 15% in the case of regional banks) in the aggregate of the bank’s total issued and outstanding voting shares; or

a shareholder holding (together with persons who have a special relationship with such shareholder) in excess of 4% in the aggregate of the bank’s (excluding regional banks) total issued and outstanding voting shares of a bank (excluding shares subject to the shareholding restrictions on ~~“non-financial~~“non-financial business group companies” as described below), where such shareholder is the largest shareholder or has actual control over the major business affairs of the bank through, for example, appointment and dismissal of the officers pursuant to the Enforcement Decree of the Bank Act.Non-financial business group companies primarily consist of: (i) any single shareholding group whosenon-financial company assets comprise no less than 25% of its aggregate net assets; (ii) any single shareholding group whosenon-financial company assets comprise no less than ￦2 trillion in aggregate; or (iii) any investment company under the Financial Investment Services and Capital Markets Act of which any single shareholding group identified in (i) or (ii) above, owns more than 4% of the total issued and outstanding shares. ~~See “—Supervision and Regulation—Principal Regulations Applicable to Banks—Restrictions on Bank Ownership.”~~

Under these restrictions, banks may not extend credits to a major shareholder (together with persons who have a special relationship with that shareholder) in an amount greater than the lesser of (x) 25% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) and (y) the relevant major ~~shareholders’~~shareholder’s shareholding ratio multiplied by the sum of the bank’s Tier I and Tier II capital (less any capital deductions). In addition, the total sum of credits granted to all major shareholders must not exceed 25% of the bank’s Tier I and Tier II capital (less any capital deductions).

Interest Rates

Korean banks generally depend on deposits as their primary funding source. Under the Act on Registration of Credit Business and Protection of Finance Users ~~as last amended in March 2016,~~and the regulations thereunder, interest rates on loans made by registered banks in Korea to individuals or small corporations, as defined under the Framework Act on Small and Medium Enterprises, may not exceed ~~27.9%~~24% per annum. ~~Such restriction is scheduled to expire on December 31, 2018.~~ Historically, interest rates on deposits and lending were regulated by the Monetary Policy Committee. There are no controls on deposit interest rates in Korea, except for the prohibition on interest payments on current account deposits.

Lending to Small- andMedium-Sized Enterprises

In order to obtain funding from the Bank of Korea at concessionary rates for their small- andmedium-sized enterprise loans, banks are required to allocate a certain minimum percentage of any quarterly increase in their Won currency lending to small- andmedium-sized enterprises. Currently, this minimum percentage is 45% in the case of nationwide banks and 60% in the case of regional banks. If a bank does not comply with this requirement, the Bank of Korea may:

require the bank to prepay all or a portion of funds provided to that bank in support of loans to small- andmedium-sized enterprises; or

lower the bank’s credit limit.

Disclosure of Management Performance

For the purpose of protecting depositors and investors in commercial banks, the Financial Services Commission requires commercial banks to publicly disclose certain material matters, including:

financial condition and profit and loss of the bank and its subsidiaries;

fund raising by the bank and the appropriation of such funds;

any sanctions levied on the bank under the Bank Act or any corrective measures or sanctions under the Law on Improvement of Structure of Financial Industry; and

except as may otherwise have been disclosed by a bank or its financial holding company listed on the KRX KOSPI Market in accordance with the Financial Investment Services and Capital Markets Act, occurrence of any of the following events or any other event as prescribed by the applicable regulations:

(i)

loans bearing no profit made to a single business group in an amount exceeding 10% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) as of the end of the previous month (where the loan exposure to that borrower is calculated pursuant to the criteria under the Detailed Regulation on the Supervision of the Banking Business), unless the loan exposure to that group is not more than ￦4 billion; and

(ii)

any loss due to court judgments or similar decisions in civil proceedings in an amount exceeding 1% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) as of the end of the previous month, unless the loss is not more than ￦1 billion.

Restrictions on Lending

Pursuant to the Bank Act and itssub-regulations,commercial banks may not provide:

loans directly or indirectly secured by a pledge of a bank’s own shares;

loans directly or indirectly to enable a natural or juridical person to buy the bank’s own shares;

•

loans to any of the bank’s officers or employees, other thande minimis loans of up to (i) ￦20 million in the case of a general loan, (ii) ￦50 million in the case of a general loan plus a housing loan or (iii) ￦60 million in the aggregate for general loans, housing loans and loans to pay damages arising from wrongful acts of employees in financial transactions;

credit (including loans) secured by a pledge of shares of a subsidiary corporation of the bank or to enable a natural or juridical person to buy shares of a subsidiary corporation of the bank; or

loans to any officers or employees of a subsidiary corporation of the bank, other than general loans of up to ￦20 million or general and housing loans of up to ￦50 million in the aggregate.

Regulations Relating to Retail Household Loans

The Financial Services Commission has implemented a number of changes in recent years to the regulations relating to retail household lending by banks. Under the currently applicable regulations:

as to loans secured by collateral of housing (including apartments) located nationwide, theloan-to-value ratio (the aggregate principal amount of loans secured by such collateral over the appraised value of the collateral) should not exceed 70%;

as to loans secured by collateral of housing (including apartments) located in areas of excessive investment or housing (including apartments) located in areas of high speculation, in each case as designated by the government, ~~(i)~~ theloan-to-value ratio should not exceed 40%, except that ~~the~~ such maximumloan-to-value ratio should be 50% for ~~first-home buyers,~~ low-income households ~~with~~that (i) have an annual income of less than ￦70 million ~~(for first home buyers,~~(or ￦80 ~~million) or buyers of~~ million for first-home buyers), (ii) do not currently own any housing and (iii) are using the loan to purchaselow-price housing valued at less than ￦600 ~~million should not exceed 50%;~~million;

as to any new loans secured by collateral of housing to be extended to a household, any member of which has already received one or more loans secured by ~~the~~ collateral of housing, the maximumloan-to-value ratio is 10% lower than the applicableloan-to-value ratio described above;

as to loans secured by collateral of housing (including apartments) located in areas of excessive investment or housing (including apartments) located in areas of high speculation, in each case, as designated by the government, the borrower’sdebt-to-income ratio (calculated as ~~(i)~~(1) the aggregate annual total payment amount of (x) the principal of and interest on loans secured by such housing and (y) the interest on other debts of the borrower over ~~(ii)~~(2) the borrower’s annual income) should not exceed 40%, except that ~~the~~ such maximumdebt-to-income ratio is 50% for ~~first-home buyers,~~ low-income households ~~with~~that (i) have an annual income of less than ￦70 million ~~or buyers of~~ (or ￦80 million for first-home buyers), (ii) do not currently own any housing and (iii) are using the loan to purchaselow-price housing valued at less than ￦600 ~~million should not exceed 50%;~~million;

as to any new loans secured by collateral of housing to be extended to a household, any member of which has already received one or more loans secured by collateral of housing, the maximumdebt-to-income ratio is 10% lower than the applicabledebt-to-income ratio described above;

as to apartments located in areas of high speculation as designated by the government, a household is permitted to have only one new loan secured by such apartment; and

where a household has two or more loans secured by apartments located in areas of high speculation as designated by the government, the loan with the earliest maturity date must be repaid first and the number of loans must be eventually reduced to one.

Restrictions on Investments in Property

A bank may not invest in securities set forth below in excess of 100% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions):

debt securities (within the meaning of paragraph (3) of Article 4 of the Financial Investment Services and Capital Markets Act) the maturity of which exceeds three years, but excluding government bonds, monetary stabilization bonds issued by the Bank of Korea and bonds within the meaning of item 2, paragraph (6) of Article 11 of the Act on the Improvement of the Structure of the Financial Industry;

equity securities, but excluding securities within the meaning of item 1, paragraph (6) of Article 11 of the Act on the Improvement of the Structure of the Financial Industry;

derivatives linked securities (within the meaning of paragraph (7) of Article 4 of the Financial Investment Services and Capital Markets Act) the maturity of which exceeds three years; and

beneficiary certificates, investment contracts and depositary receipts (within the meaning of paragraph (2) of Article 4 of the Financial Investment Services and Capital Markets Act) the maturity of which exceeds three years.

A bank may possess real estate property only to the extent necessary for the conduct of its business. The aggregate value of such property may not exceed 60% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions). Any property that a bank acquires by exercising its rights as a secured party, or which a bank is prohibited from acquiring under the Bank Act, must be disposed of within three years, unless specified otherwise by the regulations thereunder.

Restrictions on Shareholdings in Other Companies

Under the Bank Act, a bank may not own more than 15% of shares outstanding with voting rights of another corporation, except where, among other reasons:

that corporation engages in a category of financial businesses set forth by the Financial Services Commission; or

the acquisition of shares by the bank is necessary for the corporate restructuring of such corporation and is approved by the Financial Services Commission.

In the above exceptional cases, the total investment in corporations in which the bank owns more than 15% of the outstanding shares with voting rights may not exceed (i) 20% of the sum of Tier I and Tier II capital (less any capital deductions) or (ii) 30% of the sum of Tier I and Tier II capital (less any capital deductions) where the acquisition satisfies the requirements determined by the Financial Services Commission.

The Bank Act provides that a bank using its bank accounts and its trust accounts is not permitted to acquire the shares issued by the major shareholder of such bank in excess of an amount equal to 1% of the sum of Tier I and Tier II capital (less any capital deductions).

Restrictions on Bank Ownership

Under the Bank Act, a single shareholder and persons who have a special relationship with that shareholder generally may acquire beneficial ownership of no more than 10% of a nationwide bank’s total issued and outstanding shares with voting rights and no more than 15% of a regional bank’s total issued and outstanding shares with voting rights. The Korean government, the KDIC and bank holding companies qualifying under the Financial Holding Company Act are not subject to this limit. However, pursuant to an amendment to the Bank Act which became effective on February 14, 2014,non-financial business group companies may not acquire beneficial ownership of shares of a nationwide bank in excess of 4% ~~of that bank’s outstanding voting shares~~ (or 15% in the case of a regional bank), of that bank’s outstanding voting shares, unless they satisfy certain requirements set forth by the Enforcement Decree of the Bank Act, obtain the approval of the Financial Services Commission and agree not to exercise voting rights in respect of shares in excess of the 4% limit (or the 15% limit in the case of a regional bank), in which case they may acquire beneficial ownership of up to 10% of a nationwide bank’s outstanding voting shares. Such amendment grants an exception fornon-financial business group companies which, at the time of the enactment of the amended provisions, held more than 4% of the shares of a bank.

~~“Non-financial business group companies” as defined under the Bank Act include:~~

~~(1)~~

~~any same shareholder group with aggregate net assets of all non-financial business companies belonging to such group of not less than 25% of the aggregate net assets of all members of such group;~~

~~(2)~~

~~any same shareholder group with aggregate assets of all non-financial business companies belonging to such group of not less than ￦2 trillion;~~

~~(3)~~

any mutual fund in which a same shareholder group identified in item (1) or (2) above beneficially owns and/or exercises the voting rights of more than 4% of the total issued and outstanding voting shares of such mutual fund;

~~(4)~~

any private equity fund with (a) a person falling under any of items (1) through (3) above as a limited partner holding not less than 10% of the total amount of contributions to the private equity fund, or (b) a person falling under any of items (1) through (3) above as a general partner, or (c) the total equity of the private equity fund acquired by each affiliate belonging to several enterprise groups subject to the limitation on mutual investment being 30% or more of the total amount of contributions to the private equity fund; or

~~(5)~~

any investment purpose company in which a private equity fund falling under item (4) above acquires or holds shares in excess of 4% of the shares or equity of such company or exercises de facto control over significant managerial matters of such company through appointment or dismissal of executives or in any other manner.

In addition, if a foreign investor, as defined in the Foreign Investment Promotion Act, owns in excess of 4% of a nationwide bank’s outstanding voting shares,non-financial business group companies may acquire beneficial ownership of up to 10% ~~of that bank’s outstanding voting shares~~ (or 15% in the case of a regional bank), of that bank’s outstanding voting shares, and in excess of 10% (or 15% in the case of a regional bank), 25% or 33% of that bank’s outstanding voting shares with the approval of the Financial Services Commission, in each instance, up to the number of shares owned by the foreign investor. Any other person (whether a Korean national or a foreign investor), with

the exception ofnon-financial business group companies described above, may acquire no more than 10% of a nationwide bank’s total voting shares issued and outstanding, unless they obtain approval from the Financial Services Commission in each instance where the total holding will exceed 10% (or 15% in the case of regional banks), 25% or 33% of the bank’s total voting shares issued and outstanding provided that, in addition to the foregoing threshold shareholding ratios, the Financial Services Commission may, at its discretion, designate a separate and additional threshold shareholding ratio.

Deposit Insurance System

The Depositor Protection Act provides insurance for certain deposits of banks in Korea through a deposit insurance system. Under the Depositor Protection Act, all banks governed by the Bank Act are required to pay an insurance premium to the KDIC on a quarterly basis, and the rate is determined under the Enforcement Decree to the Depositor Protection Act. If the KDIC makes a payment on an insured amount, it will acquire the depositors’ claims with respect to that payment amount. The KDIC insures a maximum of ￦50 million per individual for deposits and interest in a single financial institution, regardless of when the deposits were made and the size of the deposits. Certain banks governed by the Bank Act, including us, are also required by the Deposit Insurance Act to pay a special contribution of 0.025% of average deposits for each quarter as repayment of the governmental funding provided to such banks in the wake of the financial crisis in Korea in the late 1990s. The Depositor Protection Act requires such special contribution to be paid until 2027.

Restrictions on Foreign Exchange Position

Under the Korean Foreign Exchange Transaction Law, each of a bank’s net overpurchased and oversold positions may not exceed 50% of its shareholder’s equity as of the end of the prior month.

Laws and Regulations Governing Other Business Activities

A bank must register with the Ministry of ~~Strategy~~Economy and Finance to enter the foreign exchange business, which is governed by the Foreign Exchange Transaction Act of Korea. A bank must obtain the permission of the Financial Services Commission to enter the securities business, which is governed by regulations under the Financial Investment Services and Capital Markets Act. Under these laws, a bank may engage in the foreign exchange business, securities repurchase business, governmental/public bond underwriting business and governmental bond dealing business.

Regulations on Trust Business

A bank must obtain approval from the Financial Services Commission to engage in trust businesses. The Trust Act and the Financial Investment Services and Capital Markets Act govern the trust activities of banks, and they are subject to various legal and accounting procedures and requirements, including the following:

under the Trust Act, assets accepted in trust by a bank in Korea must be segregated from other assets in the accounts of that bank; and

depositors and other general creditors cannot obtain or assert claims against the assets comprising the trust accounts in the event the bank is liquidated orwound-up.

The bank must make a special reserve of 25% or more of fees from each unspecified money trust account for which a bank guarantees the principal amount and a fixed rate of interest until the total reserve for that account equals 5% of the trust amount. Since January 1999, the Korean government has prohibited Korean banks from offering new guaranteed fixed rate trust account products whose principal and interest are guaranteed.

Under the Financial Investment Services and Capital Markets Act, which became effective in February 2009, a bank with a trust business license (such as ~~us)~~Woori Bank) is permitted to offer both specified money trust account products and unspecified money trust account products. Previously, banks were not permitted to offer unspecified money trust account products pursuant to the Indirect Investment Asset Management Act, which is no longer in effect following the effectiveness of the Financial Investment Services and Capital Markets Act. Due to the changes in applicable regulations, new sales of pension saving trusts, a form of unspecified money trust account product, have been suspended starting in January 2018. Transactions involving existing pension saving trusts, however, are still permitted.

Regulations on Credit Card Business

General

In order to enter the credit card business, a company must obtain a license from the Financial Services Commission. Credit card businesses are governed by the Specialized Credit Financial Business Act, ~~enacted on August 28, 1997 and last amended on April 18, 2017,~~ which sets forth specific requirements with respect to the credit card business as well as generally prohibiting unsound business practices relating to the credit card business which may infringe on the rights of credit card holders or negatively affect the soundness of the credit card industry. Credit card companies, including our wholly-owned subsidiary, Woori Card, are regulated by the Financial Services Commission and the Financial Supervisory Service.

Disclosure and Reports

Under the Specialized Credit Financial Business Act and the regulations thereunder, a credit card company is required to disclose on a periodic andon-going basis certain material matters and events. In addition, a credit card company must submit ~~its business~~periodic reports with respect to its results of operations to the Governor of the Financial Supervisory Service, ~~within one month from~~in accordance with the ~~end~~guidelines of ~~each quarter for quarterly reports and within 10 days from~~ the ~~end of each month for monthly reports.~~Financial Supervisory Service.

Restrictions on Funding

Under the Specialized Credit Financial Business Act and the regulations thereunder, a credit card company must ensure that its total assets do not exceed an amount equal to six times its equity capital and that the ratio of

its adjusted equity capital to its adjusted total assets is not less than 8%8.0%. However, if a credit card company is unable to comply with such limit upon the occurrence of unavoidable events, such as drastic changes in the domestic and global financial markets, such limit may be adjusted through a resolution of the Financial Services Commission.

Risk of Loss Due to Lost, Stolen, Forged or Altered Credit Cards

Under the Specialized Credit Financial Business Act, a credit card company is liable for any loss arising from the unauthorized use of credit cards or debit cards after it has received notice from the holder of the loss or theft of the card. A credit card company is also responsible for any losses resulting from the use of forged or altered credit cards, debit cards andpre-paid cards. A credit card company may, however, transfer all or part of this latter risk of loss to holders of credit card in the event of willful misconduct or gross negligence by holders of credit card if the terms and conditions of the agreement entered between the credit card company and members of such cards specifically provide for that transfer.

For these purposes, disclosure of a customer’s password that is made intentionally or through gross negligence, or the transfer of or giving as collateral of the credit card or debit card, is considered willful misconduct or gross negligence. However, a disclosure of a cardholder’s password that is made under irresistible force or threat to cardholder or his/her relatives’ life or health will not be deemed as willful misconduct or negligence of the cardholder.

Each credit card company must institute appropriate measures to fulfill these obligations, such as establishing provisions, purchasing insurance or joining a cooperative association.

Pursuant to the Enforcement Decree to the Specialized Credit Financial Business Act, a credit card company will be liable for any losses arising from loss or theft of a credit card (which was not from the holder’s willful misconduct or negligence) during the period beginning 60 days before the notice by the holder to the credit card company.

Pursuant to the Specialized Credit Financial Business Act, the Financial Services Commission may either restrict the limit or take other necessary measures against the credit card company with respect to such matters as

the maximum limits on the amount per credit card, details of credit card terms and conditions, management of credit card merchants and collection of claims, including the following:

maximum limits for cash advances on credit cards;

use restrictions on debit cards with respect to per day or per transaction usage;

aggregate issuance limits and maximum limits on the amount per card onpre-paid cards; and

other matters prescribed by the Enforcement Decree to the Specialized Credit Financial Business Act.

Lending Ratio in Ancillary Business

Pursuant to the Enforcement Decree to the Specialized Credit Financial Business Act, a credit card company must maintain an aggregate quarterly average outstanding lending balance to credit cardholders (including cash advances and credit card loans, but excluding restructured loans) no greater than the sum of (i) its aggregate quarterly average outstanding credit card balance arising from the purchase of goods and services and (ii) the aggregate quarterly debit card transaction volume.

Issuance of New Cards and Solicitation of New Cardholders

The Enforcement Decree to the Specialized Credit Financial Business Act establishes the conditions under which a credit card company may issue new cards and solicit new members. New credit cards may be issued only to the following persons:

persons who are at least 19 years old when they apply for a credit card;

persons whose capability to pay bills as they come due has been verified using standards established by the credit card company; and

in the case of minors who are 18 years old, persons who submit documents evidencing employment as of the date of the credit card application, such as an employment certificate, or persons for whom the issuance of a credit card is necessitated by governmental policies, such as financial aid.

In addition, a credit card company may not solicit credit card members by:

providing economic benefits or promising to provide economic benefits in excess of 10% of the annual credit card fee (in the case of credit cards with annual fees that are less than the average of the annual fees charged by ~~the~~ major credit cards in Korea, the annual fee will be deemed to be equal to such average annual fee) in connection with issuing a credit card; provided, however, that providing or promising economic benefits to provide economic benefits not exceeding the amount of the annual credit card fee to an applicant that becomes a credit card member through an online platform is permissible;

soliciting applicants on roads, public places or along corridors used by the general public;

soliciting applicants through visits, except those visits made upon prior consent and visits to a business area;

soliciting applicants through the Internet without verifying whether the applicant is who he or she purports to be, by means of a certified digital signature under the Digital Signature Act; and

soliciting applicants through pyramid sales methods.

Compliance Rules on Collection of Receivable Claims

Pursuant to Supervisory Regulation on the Specialized Credit Financial Business, a credit card company may not:

exert violence or threaten violence;

inform a related party (a guarantor of the debtor, blood relative or fiancée(e) of the debtor, a person living in the same household as the debtor or a person working in the same workplace as the debtor) of the debtor’s obligations without just cause;

provide false information relating to the debtor’s obligation to the debtor or his or her related parties;

threaten to sue or sue the debtor for fraud despite lack of affirmative evidence to establish that the debtor has submitted forged or false documentation with respect to ~~his/~~his or her ability to make payment;

visit or telephone the debtor during late evening hours (between the hours of 9:00 p.m. and 8:00 a.m.); and

utilize other uncustomary methods to collect the receivables that interfere with the privacy or the peace in the workplace of the debtor or his or her related parties.

Regulations on Class Actions Regarding Securities

The Law on Class Actions Regarding Securities was enacted as of January 20, 2004 and last amended on May 28, 2013. The Law on Class Actions Regarding Securities governs class actions suits instituted by one or more representative plaintiff(s) on behalf of 50 or more persons who claim to have been damaged in a capital markets transaction involving securities issued by a listed company in Korea.

Applicable causes of action with respect to such suits include:

claims for damages caused by misleading information contained in a securities statement;

claims for damages caused by the filing of a misleading business report, semi-annual report, or quarterly report;

claims for damages caused by insider trading or market manipulation; and

claims instituted against auditors for damages caused by accounting irregularities.

Any such class action may be instituted upon approval from the presiding court and the outcome of such class action will have a binding effect on all potential plaintiffs who have not joined the action, with the exception of those who have filed an opt out notice with such court.

Regulations on Financial Investment Business

General

The Financial Investment Services and Capital Markets Act, which became effective in February 2009, regulates and governs the financial investment business in Korea. The entities that regulate and supervise financial investment companies are the Financial Services Commission, the Financial Supervisory Service and the Securities and Futures Commission.

Under the Financial Investment Services and Capital Markets Act, a company must obtain a license from the Financial Services Commission to commence a financial investment business such as a brokerage business, a dealing business or an underwriting business, or register with the Financial Services Commission to commence a financial investment business such as an investment advisory business or a discretionary investment management business. A bank is permitted to engage in certain types of financial investment business as specified under the Enforcement Decree of the Bank Act. Prior to commencing a financial investment business, a bank must file a report with the Financial Services Commission and apply for a license pursuant to the Financial Investment Services and Capital Markets Act.

Consolidation of Capital Markets-Related Laws

Prior to the effectiveness of the Financial Investment Services and Capital Markets Act, there were separate laws regulating various types of financial institutions depending on the type of financial institution (e.g.,

securities companies, futures companies, trust business companies and asset management companies) and subjecting financial institutions to different licensing and ongoing regulatory requirements (e.g., the Korean Securities Exchange Act, the Futures Business Act and the Indirect Investment Asset Management Business Act). By applying one uniform set of rules to the same financial business having the same economic function, the Financial Investment Services and Capital Markets Act attempts to improve and address issues caused by the previous regulatory system under which the same economic function relating to capital markets-related businesses ~~was~~are governed by multiple regulations. To this end, the Financial Investment Services and Capital Markets Act categorizes capital markets-related businesses into six different ~~functions:~~functions, as follows:

dealing, trading and underwriting of “financial investment products” (as defined below);

brokerage of financial investment products;

establishment of collective investment schemes and the management thereof;

investment advice;

discretionary investment management; and

trusts (together with the five businesses set forth above, the “Financial Investment Businesses”).

Accordingly, all financial businesses relating to financial investment products have been reclassified as one or more of the Financial Investment Businesses described above, and financial institutions are subject to the regulations applicable to their relevant Financial Investment Businesses, regardless of the type of the financial institution. For example, under the Financial Investment Services and Capital Markets Act, derivative businesses conducted by former securities companies and future companies will be subject to the same regulations.

Banking and insurance businesses are not subject to the Financial Investment Services and Capital Markets Act and will continue to be regulated under separate laws. However, they may become subject to the Financial Investment Services and Capital Markets Act if their activities involve any financial investment businesses requiring a license pursuant to the Financial Investment Services and Capital Markets Act.

Comprehensive Definition of Financial Investment Products

In an effort to encompass the various types of securities and derivative products available in the capital markets, the Financial Investment Services and Capital Markets Act sets forth a comprehensive term “financial investment products,”�� defined to mean all financial products with a risk of loss in the invested amount (in contrast to “deposits,” which are financial products for which the invested amount is protected or preserved). Financial investment products are classified into two major categories: (i) “securities” (financial investment products in which the risk of loss is limited to the invested amount) and (ii) “derivatives” (financial investment products in which the risk of loss may exceed the invested amount). As a result of the general and broad definition of financial investment products, a variety of financial products may be defined as a financial investment product, which would enable Financial Investment Companies (defined below) to handle a broader range of financial products. Under the Financial Investment Services and Capital Markets Act, entities formerly licensed as securities companies, asset management companies, futures companies and other entities engaging in any Financial Investment Business are classified as “Financial Investment Companies.”

New License System and the Conversion of Existing Licenses

Under the Financial Investment Services and Capital Markets Act, Financial Investment Companies are able to choose the type of Financial Investment Business in which to engage (through a “check the box” method set forth in the relevant license application), by specifying the desired (i) Financial Investment Business, (ii) financial investment product and (iii) target customers to which financial investment products may be sold or distributed (that is, general investors or professional investors). Licenses will be issued under the specific businesssub-categories described in the foregoing sentence. For example, it would be possible for a Financial Investment Company to obtain a license to engage in the Financial Investment Business of (i) dealing (ii) over the counter derivatives products or (iii) only with sophisticated investors.

Financial institutions that engage in business activities constituting a Financial Investment Business are required to take certain steps, such as renewal of their license or registration, in order to continue engaging in such business activities. Financial institutions that are not licensed Financial Investment Companies are not permitted to engage in any Financial Investment Business, subject to the following exceptions: (i) banks and insurance companies are permitted to engage in certain categories of Financial Investment Businesses for a period not exceeding six months commencing on the effective date of the Financial Investment Services and Capital Markets Act; and (ii) other financial institutions that engaged in any Financial Investment Business prior to the effective date of the Financial Investment Services and Capital Markets Act (whether in the form of a concurrent business or an incidental business) are permitted to continue such Financial Investment Business for a period not exceeding six months commencing on the effective date of the Financial Investment Services and Capital Markets Act.

Expanded Business Scope of Financial Investment Companies

Under the previous regulatory regime in Korea, it was difficult for a financial institution to explore a new line of business or expand upon its existing line of business. For example, previously a financial institution licensed as a securities company generally was not permitted to engage in the asset management business. In contrast, under the Financial Investment Services and Capital Markets Act, pursuant to the integration of its current businesses involving financial investment products into a single Financial Investment Business, a licensed Financial Investment Company is permitted to engage in all types of Financial Investment Businesses, subject to satisfying relevant regulations (for example, maintaining an adequate “Chinese Wall,” to the extent required). As to incidental businesses (that is, a financial related business which is not a Financial Investment Business), the Financial Investment Services and Capital Markets Act generally allows a Financial Investment Company to freely engage in such incidental businesses by shifting away from the previous positive-list system towards a more comprehensive system. In addition, a Financial Investment Company is permitted to (i) outsource marketing activities by contracting “introducing brokers” that are individuals but not employees of the Financial Investment Company, (ii) engage in foreign exchange businesses related to their Financial Investment Business and (iii) participate in the settlement network, pursuant to an agreement among the settlement network participants.

Improvement in Investor Protection Mechanism

While the Financial Investment Services and Capital Markets Act widens the scope of financial businesses in which financial institutions are permitted to engage, a more rigorous investor-protection mechanism is also imposed upon Financial Investment Companies dealing in financial investment products. The Financial Investment Services and Capital Markets Act distinguishes general investors from sophisticated investors and provides new or enhanced protections to general investors. For instance, the Financial Investment Services and Capital Markets Act expressly provides for a strict know-your-customer rule for general investors and imposes an obligation that Financial Investment Companies should market financial investment products suitable to each general investor, using written explanatory materials. Under the Financial Investment Services and Capital Markets Act, a Financial Investment Company could be liable if a general investor proves (i) damage or losses relating to such general investor’s investment in financial investment products solicited by such Financial Investment Company and (ii) the absence of the requisite written explanatory materials, without having to prove fault or causation. With respect to ~~any~~ conflicts of interest between Financial Investment Companies and investors, the Financial Investment Services and Capital Markets Act expressly requires (i) disclosure of any conflict of interest to investors and (ii) mitigation of conflicts of interest to a comfortable level or abstention from the relevant transaction.

Other Changes to Securities / Fund Regulations

The Financial Investment Services and Capital Markets Act changed various securities regulations including those relating to public disclosure, insider trading and proxy contests, which were previously governed by the Korean Securities Exchange Act. For example, the 5% and 10% reporting obligations under the Korean

Securities Exchange Act have become more stringent. The Indirect Investment and Asset Management Business Act strictly limited the kind of vehicles that could be utilized under a collective investment scheme, restricting the range of potential vehicles to trusts and corporations, and the type of funds that can be used for investments. However, under the Financial Investment Services and Capital Markets Act, these restrictions have been significantly liberalized, permitting all vehicles that may be created under Korean law, such as limited liability companies or partnerships, to be used for the purpose of collective investments and allowing investment funds to be more flexible as to their investments.

Act on the Corporate Governance of Financial Companies

The Act on the Corporate Governance of Financial Companies, which became effective on August 1, 2016, was enacted to address the need for strengthened regulations on corporate governance of financial institutions and to serve as a uniform set of regulations on corporate governance matters applicable to financial institutions across a variety of industry sectors. It contains several key measures, including (i) eligibility requirements for officers of financial institutions and standards for determining whether officers of financial institutions may hold concurrent positions in other companies, (ii) standards for composition and operation of the board of directors of financial institutions, (iii) standards for establishment, composition and operation of various committees of the board of directors of financial institutions, (iv) regulations on internal control and risk management, (v) requirements and procedures for the approval of a change of major shareholders and (vi) special regulations to protect the rights of minority shareholders of financial institutions.

Item ~~4.C.~~4.C.

Organizational Structure

The following chart provides an overview of our structure, including our significant subsidiaries and our ownership of such subsidiaries as of the date of this annual report:

~~We are the direct or indirect parent company of a number of subsidiaries.~~ The following table provides summary information for our subsidiaries (other than structured companies) that are consolidated in our consolidated financial statements as of and for the year ended December 31, ~~2017:~~2019:

Subsidiary
   Percentage of
Ownership Total Assets    Shareholders’
Equity    Operating
Revenue    Net
Income
   (in millions of Won)
Woori Card Co., Ltd.
   100.0 % ￦ 8,605,993    ￦ 1,632,288    ￦ 1,771,157    ￦ 101,214
Woori Investment Bank Co., Ltd.
   59.8 % 1,880,157    291,548    183,376    20,023
Woori FIS Co., Ltd.
   100.0 % 103,932    32,546    252,460    1,940
Woori Finance Research Institute Co., Ltd.
   100.0 % 3,790    3,441    4,733    83
Woori Credit Information Co., Ltd.
   100.0 % 33,298    27,124    31,580    861
Woori Fund Service Co., Ltd.
   100.0 % 12,653    11,411    9,021    1,398
Woori Private Equity Asset Management Co., Ltd.
   100.0 % 42,894    40,225    7,257    (4,114 )
Korea BTL Infrastructure Fund.
   99.9 % 786,480    786,180    30,240    26,390
Woori America Bank.
   100.0 % 1,954,301    275,053    81,337    11,869
Woori Bank (China) Limited.
   100.0 % 4,960,637    501,953    388,913    13,809
PT Bank Woori Saudara Indonesia 1906, Tbk
   79.9 % 2,230,617    485,446    192,485    38,488
AO Woori Bank.
   100.0 % 201,704    52,603    15,656    4,748
Banco Woori Bank do Brasil S.A.
   100.0 % 213,889    32,346    20,455    1,843
Woori Global Market Asia Limited
   100.0 % 290,226    111,884    11,345    1,922
Woori Finance Cambodia
   100.0 % 51,304    18,431    5,895    983
Woori Finance Myanmar
   100.0 % 18,236    12,929    2,506    791
Wealth Development Bank Corp.
   51.0 % 191,049    34,240    13,632    1,323
Woori Bank Vietnam Limited
   100.0 % 775,758    143,598    29,698    2,436
Subsidiary
   Percentage of
Ownership Total Assets    Shareholders’
Equity    Operating
Revenue    Net
Income
   (in millions of Won)
Woori Bank
   100.0 % ￦ 348,181,658    ￦ 22,655,090    ￦ 22,240,947    ￦ 1,505,547
Woori Card Co., Ltd.
   100.0 % 10,087,342    1,788,167    1,368,234    114,196
Woori Investment Bank Co., Ltd.
   59.8 % 3,398,960    367,338    204,655    53,358
Woori FIS Co., Ltd.
   100.0 % 91,079    35,967    244,923    3,107
Woori Finance Research Institute Co., Ltd.
   100.0 % 5,447    3,448    5,452    160
Woori Credit Information Co., Ltd.
   100.0 % 37,872    29,924    39,118    1,698
Woori Fund Service Co., Ltd.
   100.0 % 16,852    14,743    11,071    1,735
Woori Asset Trust Co., Ltd.
   67.2 % 139,839    94,429    —    —
Woori Asset Management Corp.
   73.0 % 113,037    106,736 �� 9,204    1,720
Woori Private Equity Asset Management Co., Ltd.
   100.0 % 38,243    35,258    4,152    (2,087 )
Woori Global Asset Management Co., Ltd
   100 % 32,807    29,577    3,588    (1,360 )
Item 4.D.
Property, Plants and Equipment
Our registered office and corporate headquarters, with a total area of approximately 97,222 square meters, are located at 51,Sogong-ro, Jung-gu, Seoul, Korea. Information regarding certain of our properties in Korea as of December 31, ~~2017~~2019 is presented in the following table:

Type of Facility/Building

Location
   Area
      (square meters)
Woori Bank registered office and corporate headquarters
   51,Sogong-ro,Jung-gu, Seoul, Korea 04632    97,222
Woori FIS registered office and corporate headquarters
   17, World Cup ~~buk-ro 60-gil,~~ buk-ro60-gil,Mapo-gu, Seoul, Korea 03921    37,442
As of December 31, ~~2017,~~2019, we had a network of ~~876~~874 banking branches in Korea, 233 of which are housed in buildings owned by us, while the remaining branches are leased properties. Lease terms are generally from two to three years and seldom exceed five years. We also have subsidiaries in the United States, China, Hong Kong, Russia, Indonesia, Cambodia, Brazil, Myanmar, the Philippines, Vietnam and ~~Vietnam~~Germany and branches, agencies and representative offices across the world. See “Item 4.B. Business Overview—Capital Markets Activities—International Banking.” We do not own any material properties outside of Korea.
~~The~~As of December 31, 2019, the net book value of ~~all~~ the properties owned by us asand ourright-of-use assets was ￦2,898 billion and ￦467 billion, respectively. As of ~~December 31, 2017 was ￦2,478~~the same date, our lease liabilities amounted to ￦419 billion.

Item 4A.
UNRESOLVED STAFF COMMENTS
We do not have any unresolved comments from the U.S. Securities and Exchange Commission staff regarding our periodic reports under the Exchange Act.
Item 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Item 5.A.
Operating Results
Overview
The following discussion is based on our consolidated financial statements, which have been prepared in accordance with IFRS as issued by the IASB. The consolidated financial statements include the accounts of subsidiaries over which substantive control is exercised through either majority ownership of voting stock and/or other means. Investments in joint ventures and associates (which are companies over which we have the ability to exercise significant influence) are accounted for by the equity method of accounting and are reported in investments in joint ventures and associates.
Trends in the Korean Economy
Our financial position and results of operations have been and will continue to be significantly affected by financial and economic conditions in Korea. Substantial growth in lending in Korea tosmall- andmedium-sized enterprises in recent years, and financial difficulties experienced by such enterprises as a result of, among other things, adverse changes in economic conditions in Korea and globally (such as the ongoingCOVID-19 pandemic affecting many countries worldwide, including Korea), may lead to increasing delinquencies and a deterioration in overall asset quality in the credit exposures of Korean banks tosmall- andmedium-sized enterprises. Our loans tosmall- andmedium-sized enterprises increased from ~~￦68,434~~￦79,371 billion as of December 31, ~~2016~~2018 to ~~￦74,906~~￦85,367 billion as of December 31, ~~2017.~~2019. In ~~2017,~~2019, we recordedcharge-offs of ~~￦325~~￦185 billion in respect of ourWon-denominated loans tosmall- andmedium-sized enterprises, compared tocharge-offs of ~~￦469~~￦199 billion in ~~2016.~~2018. See “Item 3.D. Risk Factors—Risks relating to our corporate credit portfolio—The largest portion of our exposure is tosmall- andmedium-sized enterprises, and financial difficulties experienced by companies in this segment may result in a deterioration of our asset quality and have an adverse impact on us.”
In recent years, commercial banks, consumer finance companies and other financial institutions in Korea have also made significant investments and engaged in aggressive marketing in consumer lending (including mortgage and home equity loans), leading to substantially increased competition in this segment. In 2014 and 2015, the Korean government implemented several measures to encourage consumer spending and revive the housing market in Korea, including loosening regulations on mortgage lending, which contributed to an increase in our consumer loan portfolio. However, the Korean government introduced measures inFrom the second half of 2016 ~~and 2017~~to 2019, the Korean government introduced various measures to tighten regulations on mortgage lending and housing subscription in response to the rapid growth in consumer debt and concerns over speculative investments in real estate in certain areas. Notwithstanding such measures, demand for residential property in certain areas, including Seoul, ~~has~~ continued to increase through the end of 2019, and accompanied by an increase in the prices of such property, our consumer loan portfolio increased from ~~￦104,484~~￦117,096 billion as of December 31, ~~2016~~2018 to ~~￦109,290~~￦124,003 billion as of December 31, ~~2017.~~2019. Nevertheless, a decrease in housing prices as a result of the implementation of such measures, together with the high level of consumer debt and ~~rising interest rate levels,~~deteriorating domestic and global economic conditions, could result in declines in consumer spending and reduced economic growth, which may lead to increasing delinquencies and a deterioration in asset quality. In ~~2017,~~2019, we recordedcharge-offs of ~~￦147~~￦217 billion and provisions for credit losses of ~~￦152~~￦163 billion in respect of our consumer loan portfolio,compared tocharge-offs of ~~￦155~~￦204 billion and provisions for credit losses of ~~￦77~~￦192 billion in ~~2016.~~2018. See “Item 3.D. Risk Factors—Risks relating to our consumer credit portfolio.”
The Korean economy is closely tied to, and is affected by developments in, the global economy. The overall prospects for the Korean and global economy in ~~2018~~2020 and beyond remain uncertain. In recent years, and in 2020, the global financial markets have experienced significant volatility as a result of, among other things:

the occurrence of severe health epidemics, such as the ongoingCOVID-19 pandemic;
interest rate fluctuations as well as changes in policy rates by the U.S. Federal Reserve and other central banks;
financial and social difficulties affecting many ~~governments~~countries worldwide, in particular in Latin America and Europe;

a deterioration in economic and trade relations between the United States and its major trading partners, including China;
escalations in trade protectionism globally and geopolitical tensions in East Asia and the Middle East;
the slowdown of economic growth in China and other major emerging market economies;

~~interest rate fluctuations as well as~~
increased uncertainties resulting from the ~~possibility of further increases in policy rates by~~United Kingdom’s exit from the ~~U.S. Federal Reserve~~European Union; and ~~other central banks; and~~
political and social instability in various countries in the Middle East, including Syria, Iraq and ~~Egypt, as well as the referendum in the United Kingdom in June 2016, in which a majority of voters voted in favor of Brexit.~~Egypt.
In light of the high level of interdependence of the global economy, unfavorable changes in the global financial markets, including as a result of any of the foregoing developments, could have a material adverse effect on the Korean economy and financial markets, and in turn on our business, financial condition and results of operations.
In particular, the recent global outbreak ofCOVID-19, which was declared a “pandemic” by The World Health Organization on March 11, 2020, has led to global economic and financial disruptions, including impact on international trade and business activities, sharp declines and significant volatility in the financial markets as well as decreases in interest rates worldwide. See “Item 3.D. Risk Factors—Other risks relating to our business—The recent global outbreak ofCOVID-19 may adversely affect our business, financial condition or results of operations” and “Item 3.D. Risk Factors—Other risks relating to our business—An increase in interest rates would decrease the value of our debt securities portfolio and raise our funding costs while reducing loan demand and the repayment ability of our borrowers, which could adversely affect us.”
We are also exposed to adverse changes and volatility in the global and Korean financial markets as a result of our liabilities and assets denominated in foreign currencies and our holdings of trading and investment securities, including structured products. The value of the Won relative to major foreign currencies in general and the U.S. dollar in particular has fluctuated widely in recent ~~years. See “Item 3.A. Selected Financial Data—Exchange Rates.”~~years and has recently been subject to significant volatility as a result of theCOVID-19 pandemic. A depreciation of the Won will increase our cost of servicing our foreigncurrency-denominated debt, while continued exchange rate volatility may also result in foreign
exchange losses for us. Furthermore, as a result of ~~changing~~the deterioration of global and Korean economic conditions, there has been ~~volatility in~~downward pressure on securities prices, including the stock prices of Korean and foreign companies in which we hold an interest. Such ~~volatility has~~developments have resulted in and may lead to further trading and valuation losses on our trading and investment securities portfolio as well as impairment losses on our investments in joint ventures and associates.
As a result of ~~uncertain~~progressively deteriorating conditions in the Korean and global economies and financial markets, as well as factors such as fluctuations in oil and commodity prices, interest and exchange rate fluctuations, higher unemployment, lower consumer confidence, stock market volatility, ~~potential tightening of~~changes in fiscal and monetary policies and continued tensions with North Korea, the economic outlook for the financial services sector in Korea in ~~2018~~2020 and for the foreseeable future remains highly uncertain.
Changes in Accounting Policies
IFRS 16Leases, which is effective for annual periods beginning on or after January 1, 2019, introduces a single lessee accounting model generally requiring a lessee to recognize assets and liabilities for leases. Under IFRS 16, which replaces IAS 17Leases, a lessee is required to recognize aright-of-use asset representing the lessee’s right to use the underlying leased asset and a lease liability representing the lessee’s obligation to make lease payments. We have applied IFRS 16 in our consolidated financial statements as of and for the year ended December 31, 2019. As permitted by the transition rules of IFRS 16, our comparative consolidated financial statements as of and for the years ended December 31, 2017 and 2018 have not been restated to retroactively apply IFRS 16.
For further information regarding these and other changes to our accounting policies and their effect on our consolidated financial statements, see Note2-(1) of the notes to our consolidated financial statements included elsewhere in this annual report.
Changes in Securities Values, Exchange Rates and Interest Rates
Fluctuations of exchange rates, interest rates and stock prices affect, among other things, the demand for our products and services, the value of and rate of return on our assets, the availability and cost of funding and the financial condition of our customers. The following table shows, for the dates indicated, the stock price index of all equities listed on the KRX KOSPI Market as published in the KOSPI, the Won to U.S. dollar exchange rates and benchmark Won borrowing interest rates.

June 30,
2013 Dec. 31,
2013 June 30,
2014 Dec. 31,
2014 June 30,
2015 Dec. 31,
2015 June 30,
2016 Dec. 31,
2016 June 30,
2017 Dec. 31,
2017 June 30,
2015 Dec. 31,
2015 June 30,
2016 Dec. 31,
2016 June 30,
2017 Dec. 31,
2017 June 30,
2018 Dec. 31,
2018 June 30,
2019 Dec. 31,
2019
KOSPI
1,863.32 2,011.34 2,002.21 1,915.59 2,074.20 1,961.31 1,970.35 2,026.46 2,391.79 2,467.49 2,074.20 1,961.31 1,970.35 2,026.46 2,391.79 2,467.49 2,326.13 2,041.04 2,130.62 2,197.67
￦/US$ exchange rates⁽¹⁾
￦ 1,141.45 ￦ 1,055.25 ￦ 1,011.60 ￦ 1,090.89 ￦ 1,117.34 ￦ 1,169.26 ￦ 1,154.15 ￦ 1,203.73 ￦ 1,143.75 ￦ 1,067.42 ￦ 1,117.34 ￦ 1,169.26 ￦ 1,154.15 ￦ 1,203.73 ￦ 1,143.75 ￦ 1,067.42 ￦ 1,111.79 ￦ 1,112.85 ￦ 1,154.58 ￦ 1,155.46
Corporate bond rates⁽²⁾
3.5 % 3.6 % 3.4 % 2.8 % 2.5 % 2.6 % 2.3 % 2.8 % 2.8 % 3.1 % 2.5 % 2.6 % 2.3 % 2.8 % 2.8 % 3.1 % 2.9 % 2.6 % 2.0 % 2.0 %
Treasury bond rates⁽³⁾
2.9 % 2.8 % 2.6 % 2.1 % 1.8 % 1.7 % 1.3 % 1.6 % 1.7 % 2.1 % 1.8 % 1.7 % 1.3 % 1.6 % 1.7 % 2.1 % 2.1 % 1.8 % 1.5 % 1.4 %

⁽¹⁾
Represents the noon buying rate on the dates indicated.
⁽²⁾
Measured by the yield onthree-year Korean corporate bonds rated as A+ by the Korean credit rating agencies.
⁽³⁾
Measured by the yield onthree-year treasury bonds issued by the Ministry of ~~Strategy~~Economy and Finance of Korea.
Critical Accounting Policies
The notes to our consolidated financial statements contain a summary of our significant accounting policies, including a discussion of recently issued accounting pronouncements. Certain of these policies are critical to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. We discuss these critical accounting policies below.
Impairment of Loans and Allowance for Credit Losses
We evaluate our portfolio of loans and ~~receivables portfolio~~other financial assets at amortized cost (or loans and receivables) for impairment on an ongoing basis. We have established an allowance for credit losses, which is available to absorb
losses in our portfolio of loans and ~~receivables portfolio.~~other financial assets at amortized cost (or loans and receivables). If we believe that additions or changes to the allowance for credit losses are required, we record provisions for credit
losses (as part of our impairment loss for credit loss), which are treated as charges against current income. Loan exposures that we deem to be uncollectible, including actual loan losses, net of recoveries of previouslywritten-off amounts, are charged directly against the allowance for credit losses.
We have established our allowance for credit losses as of December 31, ~~2015, 2016~~2018 and 2019 in accordance with IFRS 9 and as of December 31, 2017 in accordance with ~~International Accounting Standard 39,~~~~Financial Instruments: Recognition and Measurement~~~~. IFRS 9~~~~Financial Instruments~~ ~~is effective, and replaces International Accounting Standard 39, for annual periods commencing on or after January 1, 2018.~~IAS 39. See ~~“Item 5.B. Liquidity and Capital Resources—Recent Accounting Pronouncements.”~~
~~International Accounting Standard 39~~Note2-(1)-3) of the notes to our consolidated financial statements.
Our accounting policies under ~~International Accounting Standard 39~~IFRS 9 for losses arising from the impairment of loans and ~~receivables~~other financial assets at amortized cost and our allowance for credit loss are described in Notes2-(9)-6) and3-~~(4)~~(3) of the notes to our consolidated financial statements. ~~We base the level of our allowance for credit losses on an evaluation of the risk characteristics of our loan portfolio.~~ The ~~evaluation considers factors such as historical loss experience, the financial condition of our borrowers and current economic conditions.~~
Our allowance for credit losses represents our management’s best estimate of losses incurred in the loans and receivables portfolio as of the date of the statement of financial position. Our management is required to exercise judgment in making assumptions and estimates when calculating the allowance for credit losses on both individually and collectively assessed loans and advances.
The determination of the allowance required for loans and receivables that are deemed to be individually significant often requires the use of considerable management judgment concerning such matters as economic conditions, the financial performance of the counterparty and the value of any collateral held for which there may not be a readily accessible market. Once we have identified loans and receivables as impaired, we generally value them based on the present value of expected future cash flows discounted at the original effective interest rate of the applicable loan or receivable and compare such present value against the carrying amount of such loan or receivable, which amount is subject to various estimates by our management such as the operating cash flow of the borrower, net realizable value of any collateral held and the timing of anticipated receipts. The actual amount of the future cash flows and their timing may differ from the estimates used by our management and consequently may cause actual losses to differ from the reported allowances.
~~The allowance for portfolios ofsmaller-balance~~ homogenous loans and receivables, such as those to individuals and small business customers, and for those loans which are individually significant but for which no objective evidence of impairment exists, is determined on a collective basis. The collective allowance is calculated on a portfolio basis using statistical methodology based on our historical loss experience, which incorporates numerous estimates and judgments. We perform a regular review of the models and underlying data and assumptions.
Our consolidated financial statements for the year ended December 31, 2017 included a total allowance for credit losses of ￦1,830 billion as of that date. We recorded provisions for credit losses of ￦862 billion in 2017.
We believe that the accounting estimates related to impairment of loans and receivables and our allowance for credit losses are a “critical accounting policy” because: (1) they are highly susceptible to change from period to period because they require us to make assumptions about future default rates and losses relating to our loan portfolio; and (2) any significant difference between our estimated losses on loans and receivables (as reflected in our allowance for credit losses) and actual losses on loans and receivables could require us to record additional provisions for credit losses which, if significant, could have a material impact on our profit. Our assumptions about estimated losses require significant judgment because actual losses have fluctuated in the past and are expected to continue to do so, based on a variety of factors.
~~IFRS 9~~
~~IFRS 9 introduces a new~~ impairment model ~~which~~under IFRS 9 requires the calculation of allowance for credit losses based on expected credit losses instead of incurred credit losses (as iswas the case under ~~International Accounting~~
~~Standard~~IAS 39) by assessing changes in expected credit losses and recognizing such changes as impairment loss (or reversal of impairment loss) in profit or loss. Under IFRS 9, the allowance required to be established with respect to a loan or ~~receivable~~financial asset is the amount of the expected12-month credit loss or the expected lifetime credit loss for the applicable loan or ~~receivable,~~financial asset, according to the three stages of credit risk deterioration since initial recognition, as follows:

Stage 1 (loans and ~~receivables~~other financial assets at amortized cost for which credit risk has not significantly increased since initial recognition): the allowance for credit losses must cover expected credit losses due to possible defaults on the relevant loan or ~~receivable~~financial asset within a12-month period from the reporting date.

Stage 2 (loans and ~~receivables~~other financial assets at amortized cost for which credit risk has significantly increased since initial recognition): the allowance for credit losses must cover expected credit losses from all possible defaults during the expected lifetime of the relevant loan or ~~receivable.~~financial asset.

Stage 3 (credit-impaired loans and ~~receivables)~~other financial assets at amortized cost): the allowance for credit losses must cover expected credit losses from all possible defaults during the expected lifetime of the relevant loan or ~~receivable.~~financial asset.
~~For further information regarding IFRS 9, see Note 2-(1)-2)~~At the end of every reporting period, we evaluate whether the ~~notes~~credit risk with respect to our ~~consolidated~~loans and other financial ~~statements.~~
~~We expect that~~assets at amortized cost, after taking into account forward-looking information, has significantly increased since the ~~new model for calculating~~date of their initial recognition. When evaluating whether credit risk has significantly increased, we take into account changes in the probability of default over the remaining life of a loan or financial asset, rather than changes in the amount of expected credit losses relating thereto. We distinguish between corporate and retail exposures in performing such evaluation, and consider factors such as the following as indicators of a significant increase in credit risk:
the asset quality classification of the loan or financial asset is “precautionary” or lower;
payments on the loan or financial asset are more than 30 days past due;
there has been a significant decrease in the borrower’s credit rating;
in the case of a corporate borrower, the borrower is subject to a warning under an early warning system; or
in the case of a corporate borrower, the borrower is experiencing financial difficulties (as evidenced by factors such as a capital impairment or an adverse opinion or a disclaimer of opinion by its external auditors).
In establishing our allowance for credit losses, we take into account information available as of the relevant reporting date regarding past events, current economic conditions and forecasts of future economic conditions. The probability of default and expected loss with respect to loans and ~~receivables under IFRS 9 will continue~~other financial assets at amortized cost are calculated by considering factors such as borrower type, credit rating and applicable portfolio. In addition, in
measuring expected credit loss, we seek to use reasonable and supportable macroeconomic indicators such as economic growth rates, interest rates and stock market index levels in forecasting future economic conditions.
Our consolidated financial statements for the year ended December 31, 2019 included a total allowance for losses on loans and other financial assets at amortized cost of ￦1,657 billion as of that date. We recorded provisions for credit losses on loans and other financial assets at amortized cost of ￦386 billion in 2019.
We believe that the accounting estimates related to impairment of loans and other financial assets at amortized cost (or loans and receivables) and our allowance for credit losses are a “critical accounting policy” because: (1) they are highly susceptible to change from period to period based on our estimates of expected credit and losses relating to our loan portfolio; and (2) any significant difference between expected credit losses on loans and other financial assets at amortized cost (or loans and receivables), as reflected in our allowance for credit losses, and actual losses on loans and other financial assets at amortized cost (or loans and receivables) could require us to record additional provisions for credit losses or charge-offs which, if significant, could have a material impact on our profit. Our estimates of expected credit losses require significant management judgment ~~and estimates,~~ regarding matters such as the significance of changes in credit risk and probability of default since initial ~~recognition~~recognition. Actual losses have fluctuated in the past and ~~the amount~~are expected to continue to do so, based on a variety of ~~expected credit losses for our loans and receivables.~~factors.
Valuation of Financial Assets and Liabilities
Our accounting policy for determining the fair value of financial assets and liabilities is described in Notes~~Notes~~ 2-(9)-5),3-~~(3)~~(2) and 11 of the notes to our consolidated financial statements.
The best evidence of fair value is a quoted price in an actively traded market. In the event that the market for a financial asset or liability is not active, a valuation technique is used. The majority of valuation techniques employ only observable market data and, as such, the reliability of the fair value measurement is high. However, certain financial instruments are valued on the basis of valuation techniques that feature one or more significant market inputs that are unobservable. Valuation techniques that rely to a greater extent on unobservable inputs require a higher level of management judgment to calculate a fair value than those based wholly on observable inputs.
Valuation techniques used to calculate fair values are discussed in Notes2-(9)-5) and 11 of the notes to our consolidated financial statements. The main assumptions and estimates which our management considers when applying a model with valuation techniques are:

The likelihood and expected timing of future cash flows on the instrument. These cash flows are usually governed by the terms of the instrument, although judgment may be required when the ability of the counterparty to service the instrument in accordance with the contractual terms is in doubt. Future cash flows may be sensitive to changes in market rates.

Selecting an appropriate discount rate for the instrument. The determination of this rate is based on an assessment of what a market participant would regard as the appropriate spread of the rate for the instrument over the appropriaterisk-free rate.

Judgment to determine what model to use to calculate fair value in areas where the choice of valuation model is particularly subjective (for example, valuation of complex derivative products).
The financial instruments carried at fair value have been categorized under the three levels of the IFRS fair value hierarchy as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is amarket-based measure considered from the perspective of a market participant. As such, even when market assumptions are not readily available, our own assumptions are intended to reflect those that market participants would use in pricing the asset or liability at the measurement date.
Our consolidated financial statements for the year ended December 31, ~~2017~~2019 included financial assets measured at fair value using a valuation technique of ~~￦17,622~~￦32,724 billion, representing ~~82.9%~~91.1% of total financial assets measured at fair value, and financial liabilities measured at fair value using a valuation technique of ~~￦3,467~~￦2,933 billion, representing ~~99.2%~~98.9% of total financial liabilities measured at fair value. As used herein, the fair value using a valuation technique means the fair value at Level 2 and Level 3 in the fair value hierarchy.
We believe that the accounting estimates related to the determination of the fair value of financial instruments are a “critical accounting policy” because: (1) they may be highly susceptible to change from period to period based on factors beyond our control; and (2) any significant difference between our estimate of the fair value of these financial instruments on any particular date and either their estimated fair value on a different date or the actual proceeds that we receive upon sale of these financial instruments could result in valuation losses or losses on disposal which may have a material impact on our profit. Our assumptions about the fair value of financial instruments we hold require significant judgment because actual valuations have fluctuated in the past and are expected to continue to do so, based on a variety of factors.
Deferred Tax Assets
Our accounting policy for the recognition of deferred tax assets is described in Notes2-(22) and3-~~(2)~~(1) of the notes to our consolidated financial statements.
The recognition of deferred tax assets relies on an assessment of the probability and sufficiency of future taxable profits, future reversals of existing taxable temporary differences and ongoing tax planning strategies.
We recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, unused tax losses and unused tax credits. Deferred tax assets are recognized only to the extent it is probable that sufficient taxable profit will be available against which those deductible temporary differences, unused tax losses or unused tax credits can be utilized. This assessment requires significant management judgment and assumptions. In determining the amount of deferred tax assets, we use forecasted operating results, which are based on historical financial performance, approved business plans, including a review of the eligiblecarry-forward periods, available tax planning opportunities and other relevant considerations.
Our consolidated financial statements for the year ended December 31, ~~2017~~2019 included deferred tax assets and liabilities of ~~￦280~~￦40 billion and ~~￦23~~￦134 billion, respectively, as of that date.
We believe that the estimates related to our recognition and measurement of deferred tax assets are a “critical accounting policy” because: (1) they may be highly susceptible to change from period to period based on our assumptions regarding our future profitability; and (2) any significant difference between our estimates of future profits on any particular date and estimates of such future profits on a different date could result in an income tax expense or benefit which may have a material impact on our net income from period to period. Our assumptions about our future profitability require significant judgment and are inherently subjective.
Goodwill
Our accounting policy for goodwill is described in ~~Notes~~Note2-(13) ~~and3-(1)~~ of the notes to our consolidated financial statements.
Goodwill is recognized as the excess of (i) the sum of the consideration transferred and the amount of anynon-controlling interest in the acquiree over (ii) the net of theacquisition-date fair value of the identifiable assets acquired and the liabilities assumed. If the net amount of theacquisition-date fair value of the identifiable assets
acquired and the liabilities assumed exceeds the sum of the consideration transferred and the amount of anynon-controlling interest in the acquiree, such excess is recognized as a gain as of the acquisition date.
Goodwill is not depreciated and is stated at cost less accumulated impairment losses. However, goodwill that forms part of the carrying amount of an investment in an associate or a joint venture is not separately recognized and an impairment loss recognized is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment in the associate or the joint venture.
The review of goodwill impairment reflects our management’s best estimate of the certain factors. For example:

The future cash flows of the cash generating units, or CGUs, are sensitive to the cash flows projected for the periods for which detailed forecasts are available and to assumptions regarding thelong-term pattern of sustainable cash flows thereafter. Forecasts are compared with actual performance and verifiable economic data, but they necessarily and appropriately reflect our management’s view of future business prospects at the time of the assessment.

The rates used to discount future expected cash flows are based on the costs of capital assigned to individual CGUs and can have a significant effect on their valuation. The cost of capital percentage is generally derived from a Capital Asset Pricing Model, which incorporates inputs reflecting a number of financial and economic variables, including therisk-free interest rate in the country concerned and a premium for the inherent risk of the business being evaluated. These variables are subject to fluctuations in external market rates and economic conditions beyond our control and therefore require the exercise of significant judgment and are consequently subject to uncertainty.
A decline in a CGU’s expected cash flows or an increase in its cost of capital reduces the CGU’s estimated recoverable amount. If this is lower than the carrying value of the CGU, a charge for impairment of goodwill is recognized in the statement of comprehensive income for the year.
The accuracy of forecast cash flows is subject to a high degree of uncertainty in volatile market conditions. In such market conditions, our management retests goodwill for impairment more frequently than once a year to ensure that the assumptions on which the cash flow forecasts are based continue to reflect current market conditions and management’s best estimate of future business prospects.
Our consolidated financial statements for the year ended December 31, ~~2017~~2019 included the value of goodwill of ~~￦109~~￦351 billion as of that date.
We believe that the accounting estimates related to the fair values of our acquired goodwill are a “critical accounting policy” because: (1) they may be highly susceptible to change from period to period since they require assumptions about future cash flows,run-off rates and profitability; and (2) any significant changes in our estimates from period to period could result in the recognition of impairment losses which may have a material impact on our net income. Our assumptions about estimated future cash flows,run-off rates and profitability require significant judgment and the fair values of the goodwill could fluctuate in the future, based on a variety of factors.
Defined Benefit Obligations
Our accounting policy for the recognition of defined benefit obligations is described in Notes2-(21) and3-~~(5)~~(4) of the notes to our consolidated financial statements.
We operate both defined contribution and defined benefit pension plans for our employees. Contributions to the defined contribution plan are recognized as employee benefit expenses in the period in which an employee has rendered services entitling them to the contributions. For defined benefit pension plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the
end of each reporting period. Remeasurement, which comprises actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in our statement of financial position with a charge or credit recognized in other comprehensive income in the period in which it occurs.
Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are composed of service cost (including current and past service costs, as well as gains and losses on curtailments and settlements), net interest expense (income) and remeasurement. We present the service cost and net interest expense (income) components in profit or loss, and the remeasurement component in other comprehensive income. Curtailment gains and losses are accounted for as past service costs.
The defined benefit obligations recognized in our consolidated statement of financial position represent the actual deficit or surplus in our defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans. Liabilities for termination benefits are recognized at the earlier of either (i) when we are not able to cancel our proposal for termination benefits, or (ii) when we have recognized the cost of restructuring that accompanies the payment of termination benefits.
We believe that the estimates related to our recognition of defined benefit obligations are a “critical accounting policy” because: (1) they may be highly susceptible to change from period to period because they require us to make assumptions about discount rates, future wage growth rates, retirement rates and mortality rates; and (2) any significant remeasurement of net defined benefit obligations may have a material impact on our other comprehensive income and retained earnings. Our actuarial assumptions require significant judgment due to the complexities involved in the valuation of our defined benefit obligations and theirlong-term nature.
For an analysis of the sensitivity of our defined benefit obligations to changes in actuarial assumptions, see Note 24 of the notes to our consolidated financial statements.
Results of Operations
Net Interest Income
The following table shows, for the ~~periods~~years indicated, the principal components of our interest income:

   Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016
   (in billions of Won) (%)
Interest income

Due from banks
   ￦ 81 ￦ 75 ￦ 83 (7.4 )% 10.7 %
Loans
   7,700 7,635 7,836 (0.8 ) 2.6
Financial assets at fair value through profit or loss
   63 63 53 — (15.9 )
Investment financial assets⁽¹⁾
   808 700 548 (13.4 ) (21.7 )
Other receivables
   46 39 31 (17.4 ) (18.4 )


Total interest income
   8,698 8,512 8,551 (2.1 ) 0.5


Interest expense

Deposits
   2,888 2,547 2,380 (11.8 ) (6.6 )
Borrowings
   217 215 238 (0.9 ) 10.7
Debentures
   708 619 639 (12.6 ) 3.2
Others
   123 111 73 (9.8 ) (34.2 )


Total interest expense
   3,936 3,492 3,330 (11.3 ) (4.6 )


Net interest income
   ￦ 4,762 ￦ 5,020 ￦ 5,221 5.4 % 4.0 %


Net interest margin⁽²⁾
   1.74 % 1.71 % 1.74 %
   Year ended December 31, Percentage change
   2017 2018 2019 2018/2017 2019/2018
   (in billions of Won) (%)
Interest income

Financial assets at fair value through profit or loss
(IFRS 9)
   ￦ — ￦ 54 ￦ 51 N/A ⁽¹⁾ (5.6 )%
Financial assets at fair value through profit or loss
(IAS 39)
   53 — — N/A N/A
Financial assets at fair value through other comprehensive income
   — 280 475 N/A 69.6
Available-for-sale financial assets
   239 — — N/A N/A
Held-to-maturity financial assets
   308 — — N/A N/A
Financial assets at amortized cost:

Securities at amortized cost
   — 377 436 N/A 15.6
Loans and other financial assets at amortized cost:

Interest on due from banks
   — 113 141 N/A 24.8
Interest on loans
   — 8,832 9,444 N/A 6.9
Interest on other receivables
   — 28 30 N/A 7.1


Subtotal
   — 9,350 10,051 N/A 7.5
Loans and receivables:

Interest on due from banks
   83 — — N/A N/A
Interest on loans
   7,836 — — N/A N/A
Interest on other receivables
   31 — — N/A N/A


Subtotal
   7,950 — — N/A N/A


Total interest income
   8,551 9,684 10,577 13.2 9.2


Interest expense

Deposits
   2,380 2,917 3,424 22.6 17.4
Borrowings
   238 307 383 29.0 24.8
Debentures
   639 720 777 12.7 7.9
Others
   73 89 89 21.9 0.0
Lease liabilities
   — — 9 N/A N/A


Total interest expense
   3,330 4,033 4,683 21.1 16.1


Net interest income
   ￦ 5,221 ￦ 5,651 ￦ 5,894 8.2 4.3


Net interest margin⁽²⁾
   1.74 % 1.80 % 1.74 %

⁽¹⁾ ~~Includesavailable-for-sale~~ ~~financial assets andheld-to-maturity~~ ~~financial assets.~~
N/A = not applicable.
⁽²⁾
The ratio of net interest income to averageinterest-earning assets.
Comparison of ~~2017~~2019 to ~~2016~~2018
Interest ~~income.~~Income.  Interest income increased ~~0.5%~~9.2% from ~~￦8,512~~￦9,684 billion in ~~2016~~2018 to ~~￦8,551~~￦10,577 billion in ~~2017,~~2019, primarily asdue to a ~~result of a 2.6%~~6.9% increase in interest on ~~loans, which was partially offset by a 21.7% decrease in interest on investment financial assets.~~loans. The average balance of ~~our~~interest-earning assets increased ~~1.8%~~7.9% from ~~￦294,264~~￦314,642 billion in ~~2016~~2018 to ~~￦299,691 billion~~￦339,634 in ~~2017,~~2019, principally due to the growth inof our loan ~~portfolio as well as financial assets portfolio.~~and securities portfolios. The effect of this increase ~~was partially offset by a 4 basis point decrease in the average yield on ourinterest-earning~~ ~~assets from 2.89% in 2016 to 2.85% in 2017, which reflected a decrease in the general level of interest rates in Korea in 2017 compared to 2016.~~
~~The 2.6% increase in interest on loans from ￦7,635 billion in 2016 to ￦7,836 billion in 2017 was primarily due to:~~
~~a 7.3% increase in the average volume of general purpose household loans from ￦61,918 billion in 2016 to ￦66,420 billion in 2017, which~~ was enhanced by a 3 basis point increase in the average yield on interest-earning assets from 3.08% in 2018 to 3.11% in 2019, which reflected an overall increase in the general level of ~~such~~interest rates in Korea in 2019 compared to 2018.
The 6.9% increase in interest on loans from ~~3.41%~~￦8,832 billion in ~~2016~~2018 to ~~3.44%~~￦9,444 billion in ~~2017; and~~
2019 was principally due to:

a ~~5.6%~~6.5% increase in the average volume of ~~mortgage~~general purpose household loans (including home equity loans) from ~~￦45,007~~￦67,042 billion in ~~2016~~2018 to ~~￦47,545~~￦71,413 billion in ~~2017,~~2019, which was enhanced by a ~~2 basis point increase in the average yield of such loans from 2.94% in 2016 to 2.96% in 2017.~~
The effect of the above increases was offset in part by a 2.9% decrease in the average volume of commercial and industrial loans from ￦98,202 billion in 2016 to ￦95,349 billion in 2017, which in turn was partially offset by a 115 basis point increase in the average yield on such loans from ~~3.28%~~3.95% in ~~2016~~2018 to ~~3.29%~~4.10% in ~~2017.~~2019;
~~The~~
a 5.8% increase in the average volume of general purpose household loans and mortgage loans was primarily due to increased demand for such loans among consumers in Korea. The average yields on general purpose household loans and mortgage loans increased mainly due to an increase in interest rates for loans in Korea commencing in the second half of 2017. The decrease in the average volume of commercial and industrial loans from ￦104,269 billion in 2018 to ￦110,291 billion in 2019, which was partially offset by a 3 basis point decrease in the average yield on such loans from 3.30% in 2018 to 3.27% in 2019; and
a 10.0% increase in the average volume of mortgage loans from ￦48,445 billion in 2018 to ￦53,296 billion in 2019. The average yield on such loans remained stable at 3.22% in 2018 and 2019.
The average volumes of general purpose household loans, commercial and industrial loans and mortgage loans increased primarily due to increased demand for such loans from customers. The average yield on general purpose household loans increased mainly ~~reflected~~due to the overall increase in the general level of interest rates in Korea in 2019 compared to 2018. The average yield on commercial and industrial loans decreased mainly due to a decrease in the general level of interest rates in Korea commencing in the second half of 2019, which was reflected in such loans earlier than other types of loans. See “Item 3.D. Risk Factors—Other risks relating to ~~certain large corporate borrowers, primarily as a result~~our business—An increase in interest rates would decrease the value of our ~~efforts to decrease~~debt securities portfolio and raise our ~~exposure to such~~funding costs while reducing loan demand and the repayment ability of our borrowers, ~~and diversify our loan portfolio.~~which could adversely affect us.”
Overall, the average volume of ~~our~~ loans increased ~~1.3%~~5.1% from ~~￦234,287~~￦250,266 billion in ~~2016~~2018 to ~~￦237,340~~￦263,121 billion in ~~2017, and~~2019, while the average yield on ~~our~~ loans increased 4by 6 basis points from ~~3.26%~~3.53% in ~~2016~~2018 to ~~3.30%~~3.59% in ~~2017.~~2019.
Our financial assets portfolio consists primarily of investment financial assets (i.e., financial assets at fair value through other comprehensive income and securities at amortized cost), a majority of which ~~comprises~~comprise debt securities, including those issued by Korean financial institutions, corporations andgovernment-owned or~~-controlled~~ controlled enterprises. ~~The 21.9% decrease in interest~~Interest income on ~~investment~~ financial assets at fair value through other comprehensive income increased 69.6% from ~~￦700~~￦280 billion in ~~2016~~2018 to ~~￦548~~￦475 billion in ~~2017 was~~2019, while interest income on securities at amortized cost increased 15.6% from ￦377 billion in 2018 to ￦436 billion in 2019. Such increases were primarily due to a ~~56 basis point decrease in the average yield on such assets from 2.23% in 2016 to 1.67% in 2017, which was partially offset by a 4.9%~~34.5% increase in the average balance of such investment financial assets from ~~￦31,348~~￦32,404 billion in ~~2016~~2018 to ~~￦32,881~~￦43,568 billion in ~~2017. The decrease~~2019, which was further enhanced by a 6 basis point increase in the average yield on such investment financial assets ~~resulted mainly~~ from ~~the decrease~~2.03% in ~~the general level of interest rates~~2018 to 2.09% in ~~Korea in 2017 compared to 2016.~~2019. The increase in the average balance of investment financial assets principally reflected an increase in the amount of financial institution bonds that we held as investment financial assets. The increase in the average yield on investment financial assets resulted mainly from the overall increase in the general level of interest rates in Korea in 2019 compared to 2018.
Interest ~~expense.~~Expense.  Interest expense ~~decreased 4.6%~~increased 16.1% from ~~￦3,492~~￦4,033 billion in ~~2016~~2018 to ~~￦3,330~~￦4,683 billion in ~~2017,~~2019, primarily due to a ~~6.6% decrease~~17.4% increase in interest expense on ~~deposits.~~deposits, which was enhanced by a 24.8% increase in interest expense on borrowings and a 7.9% increase in interest expense on debentures. The average balance ofinterest-bearing liabilities increased ~~1.9%~~7.9% from ~~￦280,732~~￦300,174 billion in ~~2016~~2018 to ~~￦286,164~~￦323,855 billion in ~~2017,~~2019, principally due to an increase in the average balance of ~~deposits and debentures.~~deposits. The effect of this increase was ~~more than offset~~enhanced by ~~a decrease of 8~~an 11 basis ~~points~~point increase in the average cost ofinterest-bearing liabilities from ~~1.24%~~1.34% in ~~2016~~2018 to ~~1.16%~~1.45% in ~~2017,~~2019, which ~~was driven~~ mainly ~~by a decrease in~~reflected the ~~average cost of debentures and deposits.~~
The 6.6% decrease in interest expense on deposits from ￦2,547 billion in 2016 to ￦2,380 billion in 2017 resulted mainly from a 7.3% decrease in interest expense on Won-denominated time and savings deposits from ￦2,166 billion in 2016 to ￦2,008 billion in 2017. The decrease in interest expense on Won-denominated time and savings deposits was mainly due to a 12 basis point decrease in the average cost of such deposits from 1.20% in 2016 to 1.08% in 2017, which was partially offset by a 2.9%overall increase in the average balance of such deposits from ￦181,073 billion in 2016 to ￦186,277 billion in 2017. The decrease in the average cost of Won-denominated time and savings deposits was primarily attributable to the decrease in the general level of interest rates in Korea in ~~2017~~2019 compared to ~~2016,~~2018.
The 17.4% increase in interest expense on deposits from ￦2,917 billion in 2018 to ￦3,424 billion in 2019 resulted mainly from:
a 10 basis point increase in the average cost ofWon-denominated time and savings deposits from 1.23% in 2018 to 1.33% in 2019, which was enhanced by a 7.6% increase in the average balance of such deposits from ￦196,806 billion in 2018 to ￦211,732 billion in 2019; and
a 31 basis point increase in the average cost of other deposits (other thanWon-denominated demand deposits, time and savings deposits and certificates of deposit) from 1.31% in 2018 to 1.63% in 2019, which was enhanced by a 10.2% increase in the average balance of such deposits from ￦26,254 billion in 2018 to ￦28,930 billion in 2019.
The increases in the average cost ofWon-denominated time and savings deposits and other deposits were primarily attributable to the overall increase in the general level of interest rates in Korea in 2019 compared to 2018 as well as our efforts to increase the proportion of deposits compared to loans and the competition in connection therewith, while the increases in the average volume of such deposits mainly reflected such efforts as well as customers’ continuing preference forlow-risk products and institutions in Korea in light of the continuing uncertainty in financial markets in 2019.
Overall, the average cost of deposits increased by 12 basis points from 1.23% in 2018 to 1.35% in 2019, while the average volume of deposits increased 7.2% from ￦236,663 billion in 2018 to ￦253,635 billion in 2019.
The 24.8% increase in interest expense on borrowings from ￦307 billion in 2018 to ￦383 billion in 2019 was primarily due to a 22.3% increase in the average balance of borrowings from ￦15,752 billion in 2018 to ￦19,258 billion in 2019, which was mainly attributable to our increased reliance on borrowings to meet our funding needs.Such increase was enhanced by a 4 basis point increase in the average cost of borrowings from 1.95% in 2018 to 1.99% in 2019, which mainly reflected the overall increase in the general level of interest rates in Korea in 2019 compared to 2018.
The 7.9% increase in interest expense on debentures from ￦720 billion in 2018 to ￦777 billion in 2019 was primarily due to a 7.0% increase in the average balance of debentures from ￦27,613 billion in 2018 to ￦29,536 billion in 2019, which was mainly attributable to our increased use of debentures to meet our funding needs. Such increase was enhanced by a 2 basis point increase in the average cost of debentures from 2.61% in 2018 to 2.63% in 2019, which mainly reflected the overall increase in the general level of interest rates in Korea in 2019 compared to 2018.
Net Interest Margin.  Net interest margin represents the ratio of net interest income to average interest-earning assets. Our overall net interest margin decreased from 1.80% in 2018 to 1.74% in 2019, as a 7.9% increase in the average balance of our interest-earning assets from ￦314,642 billion in 2018 to ￦339,634 billion in 2019 outpaced a 4.3% increase in our net interest income from ￦5,651 billion in 2018 to ￦5,894 billion in 2019. The growth in average interest-earning assets was matched by a 7.9% increase in average interest-bearing liabilities from ￦300,174 billion in 2018 to ￦323,855 billion in 2019. The increase in interest income outpaced the increase in interest expense, resulting in the increase in net interest income. The decrease in net interest margin was driven mainly by a decrease in our net interest spread, which represents the difference between the average yield on our interest-earning assets and the average cost of our interest-bearing liabilities, from 1.74% in 2018 to 1.66% in 2019. The decrease in our net interest spread reflected a larger increase in the average cost of interest-bearing liabilities between the two periods compared to the increase in the average yield on interest-earning assets, as interest rates on interest-bearing liabilities adjusted later than those on interest-earning assets in the context of a lower interest rate environment in the second half of 2019. See “Item 3.D. Risk Factors—Other risks relating to our business—An increase in interest rates would decrease the value of our debt securities portfolio and raise our funding costs while reducing loan demand and the repayment ability of our borrowers, which could adversely affect us.”
Comparison of 2018 to 2017
Interest Income.  Interest income increased 13.2% from ￦8,551 billion in 2017 to ￦9,684 billion in 2018, primarily due to a 12.7% increase in interest on loans. The average yield on interest-earning assets increased 23 basis point from 2.85% in 2017 to 3.08% in 2018, which reflected an increase in the general level of interest rates in Korea in 2018 compared to 2017. The effect of this increase was enhanced by a 5.0% increase in average balance of interest-earning assets from ￦299,691 billion in 2017 to ￦314,642 in 2018, principally due to the growth of our loan portfolio.
A substantial majority of loans that were previously classified as “loans and receivables” under IAS 39 are classified since 2018 as “loans and other financial assets at amortized cost,” which is part of “financial assets at amortized cost,” under IFRS 9, while a small portion of loans that were previously classified as “loans and receivables” under IAS 39 are classified since 2018 as “financial assets at fair value through profit or loss” under IFRS 9. See “—Overview—Changes in Accounting Standards.” The 12.7% increase in interest on loans from ￦7,836 billion in 2017 to ￦8,832 billion in 2018 was principally due to:
a 51 basis point increase in the average yield on general purpose household loans (including home equity loans) from 3.44% in 2017 to 3.95% in 2018, which was enhanced by a 0.9% increase in the average volume of such loans from ￦66,420 billion in 2017 to ￦67,042 billion in 2018;
a 9.4% increase in the average volume of commercial and industrial loans from ￦95,349 billion in 2017 to ￦104,269 billion in 2018, which was enhanced by a 1 basis point increase in the average yield on such loans from 3.29% in 2017 to 3.30% in 2018; and
a 26 basis point increase in the average yield on mortgage loans from 2.96% in 2017 to 3.22% in 2018, which was enhanced by a 1.9% increase in the average volume of such loans from ￦47,545 billion in 2017 to ￦48,445 billion in 2018.
The average yields on general purpose household loans, commercial and industrial loans and mortgage loans increased mainly due to the increase in the general level of interest rates in Korea in 2018 compared to 2017.The average volumes of general purpose household loans, commercial and industrial loans and mortgage loans increased primarily due to increased demand from borrowers in anticipation of further increases in the general level of interest rates in Korea.
Overall, the average yield on loans increased by 23 basis points from 3.30% in 2017 to 3.53% in 2018, while the average volume of loans increased 5.4% from ￦237,340 billion in 2017 to ￦250,266 billion in 2018.
Investment financial assets that were previously classified as“held-to-maturity financial assets” under IAS 39 are classified since 2018 as “securities at amortized cost,” which is part of “financial assets at amortized cost,” under IFRS 9. A substantial majority of investment financial assets that were previously classified as“available-for-sale financial assets” under IAS 39 are classified since 2018 as “financial assets at fair value through other comprehensive income” under IFRS 9, while a small portion of investment financial assets that were previously classified as“available-for-sale financial assets” under IAS 39 are classified since 2018 as either “securities at amortized cost” or “financial assets at fair value through profit or loss” under IFRS 9. See Note2-(1)-3)-a) of the notes to our consolidated financial statements included elsewhere in this annual report. Interest income on investment financial assets classified in 2018 as either securities at amortized cost or financial assets at fair value through other comprehensive income, as compared to interest income on investment financial assets classified in 2017 as eitherheld-to-maturity oravailable-for-sale financial assets, increased 19.9% from ￦548 billion in 2017 to ￦657 billion in 2018. Such increase was primarily due to a 36 basis point increase in the average yield on such investment financial assets from 1.67% in 2017 to 2.03% in 2018, which was partially offset by a 1.5% decrease in the average balance of such investment financial assets from ￦32,881 billion in 2017 to ￦32,404 billion in 2018. The increase in the average yield on investment financial assets resulted mainly from the increase in the general level of interest rates in Korea in 2018 compared to 2017.The decrease in the average balance of investment financial assets principally reflected a decrease in the amount of financial institution bonds that we held as investment financial assets.
Interest Expense.  Interest expense increased 21.1% from ￦3,330 billion in 2017 to ￦4,033 billion in 2018, primarily due to a 22.6% increase in interest expense on deposits, which was enhanced by a 12.7% increase in interest expense on debentures and a 29.0% increase in interest expense on borrowings. The average cost of interest-bearing liabilities increased 18 basis points from 1.16% in 2017 to 1.34% in 2018, which mainly reflected the increase in the general level of interest rates in Korea in 2018 compared to 2017. The effect of this increase was enhanced by a 4.9% increase in the average balance of interest-bearing liabilities from ￦286,164 billion in 2017 to ￦300,174 billion in 2018, principally due to an increase in the average balance of deposits.
The 22.6% increase in interest expense on deposits from ￦2,380 billion in 2017 to ￦2,917 billion in 2018 resulted mainly from:
a 15 basis point increase in the average cost ofWon-denominated time and savings deposits from 1.08% in 2017 to 1.23% in 2018, which was enhanced by a 5.7% increase in the average balance of such deposits from ￦186,277 billion in 2017 to ￦196,806 billion in 2018; and
a 32 basis point increase in the average cost of other deposits (other thanWon-denominated demand deposits, time and savings deposits and certificates of deposit) from 0.99% in 2017 to 1.31% in 2018, which was enhanced by a 7.4% increase in the average balance of such deposits from ￦24,444 billion in 2017 to ￦26,254 billion in 2018.
The increases in the average cost ofWon-denominated time and savings deposits and other deposits was primarily attributable to the increase in the general level of interest rates in Korea in 2018 compared to 2017, while the increases in the average volume of such deposits mainly reflected customers’ continuing preference forlow-risk products and institutions in Korea in light of the continuing uncertainty in financial markets in ~~2017.~~2018.
Overall, the average cost of deposits increased by 17 basis points from 1.06% in 2017 to 1.23% in 2018, while the average volume of ~~our~~ deposits increased ~~2.7%~~5.8% from ~~￦217,696 billion in 2016 to~~ ￦223,593 billion in 2017 ~~while the average cost of our deposits decreased 11 basis points from 1.17%~~to ￦236,663 billion in ~~2016 to 1.06%~~2018.
The 12.7% increase in ~~2017.~~
~~Interest~~interest expense on debentures ~~increased 3.2%~~ from ~~￦619 billion in 2016 to~~ ￦639 billion in 2017 to ￦720 billion in 2018 was primarily due to a ~~12.5%~~6.8% increase in the average balance of debentures from ~~￦22,988 billion in 2016 to~~ ￦25,865 billion in 2017 to ￦27,613 billion in 2018, which was mainly attributable to our increased use of debentures to meet our funding ~~needs. Such~~needs.Such increase was ~~partially offset~~enhanced by a 2214 basis point ~~decrease~~increase in the average cost of debentures from ~~2.69% in 2016 to~~ 2.47% in 2017 to 2.61% in 2018, which mainly reflected the ~~lower~~increase in the general level of interest ~~rate environment~~rates in Korea in ~~2017~~2018 compared to ~~2016.~~2017.
The 29.0% increase in interest expense on borrowings from ￦238 billion in 2017 to ￦307 billion in 2018 was primarily due to a 60 basis point increase in the average cost of borrowings from 1.35% in 2017 to 1.95% in 2018, which mainly reflected the increase in the general level of interest rates in Korea in 2018 compared to 2017. The effect of such increase was offset in part by a 10.8% decrease in the average balance of borrowings from ￦17,669 billion in 2017 to ￦15,752 billion in 2018.
Net ~~interest margin.~~Interest Margin.  ~~Net interest margin represents the ratio of net interest income to averageinterest-earning~~ ~~assets.~~ Our overall net interest margin increased from ~~1.71% in 2016 to~~ 1.74% in 2017 ~~as a 4.0%~~to 1.80% in 2018, asan 8.2% increase in our net interest income from ~~￦5,020 billion in 2016 to~~ ￦5,221 billion in 2017 to ￦5,651 billion in 2018 outpaced a ~~1.8%~~5.0% increase in the average balance of ourinterest-earning assets from ~~￦294,264 billion in 2016 to~~ ￦299,691 billion in ~~2017.~~2017 to ￦314,642 billion in 2018. The ~~effect of the increase in interest income was enhanced by a decrease in interest expense, resulting in an increase in net interest income, while the~~ growth in averageinterest-earning assets was largely matched by a ~~1.9%~~4.9% increase in averageinterest-bearing liabilities from ~~￦280,732 billion in 2016 to~~ ￦286,164 billion in ~~2017. The~~2017 to ￦300,174 billion in 2018, but the increase in interest income outpaced the increase in interest expense, resulting in the increase in net interest ~~margin~~income. The magnitude of this increase was ~~driven mainly~~enhanced by an increase in our net interest spread, which represents the difference between the average yield on ourinterest-earning assets and the average cost of ourinterest-bearing liabilities, from ~~1.65% in 2016 to~~ 1.69% in ~~2017.~~2017 to 1.74% in 2018. The increase in ~~our~~ net interest spread ~~reflected~~resulted from a larger ~~decrease~~increase in the average yield on interest-earning assets between the two periods compared to the increase in the average cost of ~~our~~interest-bearing liabilities, ~~compared to the decrease in the average yield on ourinterest-earning~~ ~~assets from 2016 to 2017, which was primarily attributable to the earlier adjustment of~~as interest rates on~~interest-earning~~ ~~assets compared to interest rates on~~interest-bearing liabilities ~~in the context of an increase in the general level of interest rates in Korea commencing in the second half of 2017.~~
~~Comparison of 2016 to 2015~~
~~Interest income.~~  ~~Interest income decreased 2.1% from ￦8,698 billion in 2015 to ￦8,512 billion in 2016, primarily as a result of a 13.4% decrease in interest~~adjusted later than those on ~~investment financial~~interest-earning assets ~~which was enhanced by a 0.8% decrease in interest on loans. The average balance of ourinterest-earning~~ assets increased 7.7% from ￦273,275 billion in 2015 to ￦294,264 billion in 2016, principally due to the growth of our loan portfolio. The effect of this increase was more than offset by a 29 basis point decrease in the average yield on our~~interest-earning~~ ~~assets from 3.18% in 2015 to 2.89% in 2016, which reflected a decrease in the general level of interest rates in Korea in 2016 compared to 2015.~~
The 13.4% decrease in interest on investment financial assets from ￦808 billion in 2015 to ￦700 billion in 2016 was primarily due to a 51 basis point decrease in the average yield on such assets from 2.74% in 2015 to 2.23% in 2016, which was partially offset by a 6.2% increase in the average balance of such assets from ￦29,513 billion in 2015 to ￦31,348 billion in 2016. The decrease in the average yield on investment financial assets resulted mainly from the decrease in the general level of interest rates in Korea in 2016. The increase in the average balance of investment financial assets principally reflected an increase in the amount of financial institution bonds we held as investment financial assets.
The 0.8% decrease in interest on loans from ￦7,700 billion in 2015 to ￦7,636 billion in 2016 was primarily due to a 40 basis point decrease in the average yield on commercial and industrial loans from 3.68% in 2015 to 3.28% in 2016, which was partially offset by a 3.1% increase in the average volume of such loans from ￦95,241 billion in 2015 to ￦98,202 billion in 2016. The effect of the such decrease was offset in part by a 29.4% increase in the average volume of mortgage loans from ￦34,770 billion in 2015 to ￦45,007 billion in 2016, which in turn was partially offset by a 26 basis point decrease in the average yield on such loans from 3.20% in 2015 to 2.94% in 2016.
The average yields on commercial and industrial loans and mortgage loans decreased mainly due to the decrease in the general level of interest rates in Korea in 2016. The increase in the average volume of commercial and industrial loans was primarily due to increased demand from corporate borrowers as well as our marketing efforts to increase our corporate lending. The increase in the average volume of mortgage loans mainly reflected increased demand for such loans from customers, primarily as a result of the decrease in the general level of interest rates in Korea in 2016.
Overall, the average volume of our loans increased 7.4% from ￦218,213 billion in 2015 to ￦234,287 billion in 2016, and the average yield on our loans decreased 27 basis points, from 3.53% in 2015 to 3.26% in 2016.
~~Interest expense.~~  Interest expense decreased 11.3% from ￦3,936 billion in 2015 to ￦3,492 billion in 2016, primarily due to an 11.8% decrease in interest expense on deposits, which was enhanced by a 12.6% decrease in interest expense on debentures. The average balance of~~interest-bearing~~ liabilities increased 7.7% from ￦260,546 billion in 2015 to ￦280,732 billion in 2016, principally due to an increase in the average balance of deposits. The effect of this increase was more than offset by a decrease of 27 basis points in the average cost of~~interest-bearing~~ ~~liabilities from 1.51% in 2015 to 1.24% in 2016, which was driven mainly by a decrease in the average cost of deposits.~~
The 11.8% decrease in interest expense on deposits from ￦2,888 billion in 2015 to ￦2,547 billion in 2016 resulted mainly from a 15.8% decrease in interest expense on time and savings deposits from ￦2,573 billion in 2015 to ￦2,166 billion in 2016. The decrease in interest expense on time and savings deposits was mainly due to a 33 basis point decrease in the average cost of such deposits from 1.53% in 2015 to 1.20% in 2016, which was partially offset by a 7.6% increase in the average balance of such deposits from ￦168,212 billion in 2015 to ￦181,073 billion in 2016. The decrease in the average cost of time and savings deposits was primarily attributable to the decrease in the general level of interest rates in Korea in 2016, while the increase in the average volume of such deposits mainly reflected customers’ continuing preference for~~low-risk~~ ~~products and institutions in Korea in light of the continuing uncertainty in financial markets in 2016.~~
Overall, the average volume of our deposits increased 10.1% from ￦197,762 billion in 2015 to ￦217,696 billion in 2016, while the average cost of our deposits decreased 29 basis points from 1.46% in 2015 to 1.17% in 2016.
The 12.6% decrease in interest expense on debentures from ￦708 billion in 2015 to ￦619 billion in 2016 was primarily due to a 36 basis point decrease in the average cost of debentures from 3.05% in 2015 to 2.69% in 2016, mainly caused by the lower interest rate environment in Korea in 2016. Such decrease was further enhanced by a 1.1% decrease in the average balance of debentures from ￦23,232 billion in 2015 to ￦22,988 billion in 2016, mainly caused by a decrease in debentures in foreign currency due to the maturity in 2016 of a large amount of such previously issued debentures.
~~Net interest margin.~~  ~~Our overall net interest margin decreased from 1.74% in 2015 to 1.71% in 2016, as a 7.7% increase in the average balance of ourinterest-earning~~ assets from ￦273,275 billion in 2015 to ￦294,264 billion in 2016 outpaced a 5.4% increase in net interest income from ￦4,762 billion in 2015 to ￦5,020 billion in 2016. The growth in average~~interest-earning~~ ~~assets was matched by a 7.7% increase in averageinterest-bearing~~ liabilities from ￦260,546 billion in 2015 to ￦280,732 billion in 2016, while the decrease in interest income was more than offset by the decrease in interest expense, resulting in an increase in net interest income. The decrease in net interest margin was driven mainly by a decrease in our net interest
~~spread from 1.67% in 2015 to 1.65% in 2016. The decrease in our net interest spread reflected a larger decrease in the average yield on ourinterest-earning~~ ~~assets compared to the decrease in the average cost of ourinterest-bearing~~ ~~liabilities from 2015 to 2016, primarily due to the earlier adjustment of interest rates oninterest-earning~~ ~~assets compared to interest rates oninterest-bearing~~ ~~liabilities~~ in the context of the ~~lower~~higher interest rate environment in ~~Korea in 2016.~~2018.
Impairment Losses ~~due~~Due to Credit Loss
~~Impairment~~The following table shows, for the years indicated, the components of our impairment losses due to credit ~~loss include provisions for credit losses, provisions for guarantees and provisions for unused commitments, in each case net of reversal of provisions.~~loss.
   Year ended December 31, Percentage change
   2017 2018 2019 2018/2017 2019/2018
   (in billions of Won) (%)
Impairment loss due to credit loss on financial assets measured at fair value through other comprehensive income
   ￦ — ￦ (2 ) ￦ (3 ) N/A ⁽¹⁾ 50.0 %
Impairment loss due to credit loss on securities at amortized cost
   — (2 ) 1 N/A N/M ⁽²⁾
Provisions for credit loss on loans and other financial assets at amortized cost
   — (415 ) (386 ) N/A (7.0 )
Provisions for credit losses
   (862 ) — — N/A N/A
Reversal of provisions on guarantees
   55 106 4 92.7 (96.2 )
Reversal of provisions on (provisions for) unused loan commitments
   22 (17 ) 9 N/M N/M


Total impairment losses due to credit loss
   ￦ (785 ) ￦ (330 ) ￦ (374 ) (58.0 ) 13.3


⁽¹⁾
N/A = not applicable.
⁽²⁾
N/M = not meaningful.
Comparison of ~~2017~~2019 to ~~2016~~2018
Our impairment losses due to credit loss ~~decreased 5.9%~~increased 13.3% from ~~￦834~~￦330 billion in ~~2016~~2018 to ~~￦785~~￦374 billion in ~~2017,~~2019, primarily due to a ~~3.3%~~96.2% decrease in ~~provisions for credit losses, net of~~ reversal of provisions ~~for credit losses, and a reversal of provisions for loan commitments.~~
~~The 3.3% decrease in provisions for credit losses~~on guarantees from ~~￦891 billion in 2016~~2018 to ￦862 billion in 2017 was mainly attributable to a reversal of provisions primarily caused by debt-to-equity swaps of certain corporate bonds and changes in exchange rates, which was partially offset by an increase in provisions for credit losses on consumer loans.
Provisions for loan commitments changed from net provisions of ￦3 billion in 2016 to a net reversal of provisions of ￦22 billion in 2017, principally as a result of our efforts to eliminate undrawn loan commitments of corporate borrowers by monitoring the credit activity of such borrowers.
~~Comparison of 2016 to 2015~~
Our impairment losses due to credit loss decreased 13.7% from ￦966 billion in 2015 to ￦834 billion in 2016, primarily due to a 19.9% decrease in provisions for credit losses, net of reversal of provisions for credit losses,2019, which was offset in part by a ~~57.1%~~7.0% decrease in provisions for credit loss on loans and other financial assets at amortized cost and a change in reversal of provision on (provision for) unused loan commitments during the same period. The 96.2% decrease in reversal of provisions ~~for guarantees.~~
on guarantees from ￦106 billion in 2018 to ￦4 billion in 2019 was mainly attributable to significant reversals in 2018 caused by the improvement in the financial condition of certain corporate customers on behalf of which we had extended guarantees and loans, which were not repeated in 2019. The ~~19.9%~~7.0% decrease in provisions for credit ~~losses~~loss on loans and other financial assets at amortized cost from ~~￦1,112~~￦415 billion in ~~2015~~2018 to ~~￦891~~￦386 billion in ~~2016~~2019 was ~~mainly attributable~~primarily due to our ~~management’s~~ efforts to improve the overall asset quality of our loan ~~portfolio~~portfolio. Reversal of provision on (provision for) unused loan commitments changed from a net provision of ￦17 billion in 2018 to a net reversal of ￦9 billion in 2019, mainly reflecting our efforts to reduce unused loan commitments in 2019.
Comparison of 2018 to 2017
Our impairment losses due to credit loss decreased 58.0% from ￦785 billion in 2017 to ￦330 billion in 2018, primarily due to a 51.9% decrease in provisions for credit loss on loans and other financial assets at amortized cost in 2018 compared to provisions for credit losses in 2017, which was enhanced by ~~increasing the proportion of loans with higher asset quality and strengthening credit review and monitoring procedures.~~
~~The 57.1% decrease~~a 92.7% increase in reversal of provisions on guarantees. Such impairment losses were measured under IFRS 9 in 2018, as opposed to IAS 39 in 2017, and as of January 1, 2018, we recognized in retained earnings a ￦(294) billion adjustment relating to the adoption of IFRS 9, which reflected an increase in allowances for credit losses. See “Item 4.B. Business Overview—Assets and Liabilities—Asset Quality of Loans—Loan Loss Provisioning Policy.”
The 51.9% decrease from provisions for credit losses of ￦862 billion in 2017 to provisions for credit loss on loans and other financial assets at amortized cost of ￦415 billion in 2018 was primarily due to a net reversal of loan loss allowances for corporate loans in 2018, mainly reflecting an improvement in the overall asset quality of such loans, which was partially offset by an increase in loan loss provisions for consumer loans, principally as a result of an increase in the outstanding balance of our consumer loans. The 92.7% increase in reversal of
provisions on guarantees from ~~￦140~~￦55 billion in ~~2015~~2017 to ~~￦60~~￦106 billion in ~~2016~~2018 was mainly attributable to ~~a significant reversal~~an improvement in ~~2015 of provisions for guarantees provided in respect~~the financial condition of certain corporate customers on behalf of which ~~was not repeated in 2016.~~we had extended guarantees.
Allowance for Credit Losses
For information on our allowance for credit losses, see “—“Item 5.A. Operating Results—Critical Accounting Policies—Impairment of Loans and Allowance for Credit Losses” and “Item 4.B. Business Overview—Assets and Liabilities—Loan Portfolio—Allocation and Analysis of Allowances for Credit Losses.”
Corporate Loans
The following table shows, for the ~~periods~~years indicated, certain information regarding our impaired corporate loans (including government loans and bank loans):

   As of December 31,    As of December 31,
   2015 2016 2017        2017         2018         2019
Impaired corporate loans as a percentage of total corporate loans
   2.1 % 1.5 % 1.2 %    1.2 % 0.7 % 0.5 %
Allowance for credit losses for corporate loans as a percentage of total corporate loans
   1.3 1.2 1.0    1.0 0.9 0.7
Allowance for credit losses for corporate loans as a percentage of impaired corporate loans
   63.0 80.2 82.6    82.6 120.1 136.4
Netcharge-offs of corporate loans as a percentage of total corporate loans
   0.7 0.4 0.2    0.2 0.1 0.1
During ~~2017,~~2019, impaired corporate loans and allowance for credit losses for corporate loans, each as a percentage of total corporate loans, decreased primarily due to an improvement in the overall credit quality of our corporate loans. Such decrease was enhanced by an increase in the total amount of our corporate loans from ￦136,888 billion as of December 31, 2018 to ￦139,592 billion as of December 31, 2019. However, allowance for credit losses for corporate loans as a percentage of impaired corporate loans increased during 2019, as a 17.6% decrease in allowance for credit losses for corporate loans from ￦1,225 billion as of December 31, 2018 to ￦1,009 billion as of December 31, 2019 was outpaced by a 27.5% decrease in impaired corporate loans from ￦1,021 billion as of December 31, 2018 to ￦740 billion as of December 31, 2019, which was mainly attributable to an increase in corporate customers with higher credit scores and our active efforts to charge off impaired corporate loans to improve the overall quality of our corporate loan portfolio. Net charge-offs of corporate loans as a percentage of total corporate loans remained stable at 0.1% as of December 31, 2018 and 2019.
During 2018, impaired corporate loans, allowance for credit losses for corporate loans and net charge-offs, each as a percentage of total corporate loans, decreased primarily due to an improvement in the overall credit quality of our corporate loans, as well as anthe application of modified criteria for the determination of loan impairment under IFRS 9. Such decrease was enhanced by a slight increase in the total amount of our corporate loans from ~~￦125,643 billion as of December 31, 2016 to~~ ￦136,676 billion as of December 31, ~~2017.~~2017 to ￦136,888 billion as of December 31, 2018. However, allowance for credit losses for corporate loans as a percentage of impaired corporate loans increased during ~~2017,~~2018, as ~~a 9.5%~~an 11.4% decrease in allowance for credit losses for corporate loans from ~~￦1,528 billion as of December 31, 2016 to~~ ￦1,383 billion as of December 31, 2017 to ￦1,225 billion as of December 31, 2018 was outpaced by a ~~13.6%~~39.0% decrease in impaired corporate loans from ~~￦1,905 billion as of December 31, 2016 to ￦1,646~~￦1,674 billion as of December 31, 2017 ~~which was mainly attributable todebt-to-equity~~ ~~conversions of such loans.~~
~~During 2016, impaired corporate loans, allowance for credit losses for corporate loans and netcharge-offs,~~ ~~each as a percentage of total corporate loans, decreased due~~ to ~~an improvement in the overall credit quality of our corporate loans, notwithstanding a decrease in the total amount of our corporate loans from ￦127,622~~￦1,021 billion as of December 31, 2015 to ￦125,643 billion as of December 31, 2016. However, allowance for credit losses for corporate loans as a percentage of impaired corporate loans increased during 2016, as a 10.1% decrease in allowance for credit losses for corporate loans from ￦1,700 billion as of December 31, 2015 to ￦1,528 billion as of December 31, 2016 was outpaced by a 29.4% decrease in impaired corporate loans from ￦2,697 billion as of December 31, 2015 to ￦1,905 billion as of December 31, 2016,2018, which was mainly attributable to improved credit ratings of certain corporate borrowers and redemptions ~~anddebt-to-equity~~ ~~conversions~~ of such loans.
Consumer Loans and Credit Card Balances
The following table shows, for the ~~periods~~years indicated, certain information regarding our impaired loans to the consumer sector, excluding credit card balances:

   As of December 31,    As of December 31,
   2015 2016 2017        2017         2018         2019
Impaired consumer loans as a percentage of total consumer loans
   0.4 % 0.3 % 0.3 %    0.3 % 0.3 % 0.3 %
Allowance for credit losses for consumer loans as a percentage of total consumer loans
   0.2 0.2 0.2    0.2 0.3 0.2
Allowance for credit losses for consumer loans as a percentage of impaired consumer loans
   57.1 52.5 64.7    64.7 75.2 69.6
Netcharge-offs of consumer loans as a percentage of total consumer loans
   0.2 0.1 0.1    0.1 0.1 0.1
During ~~2017,~~2019, impaired consumer loans ~~allowance for credit losses for consumer loans~~ and netcharge-offs, ~~of consumer loans,~~ each as a percentage of total consumer loans, remained stable. However, allowance for credit losses for consumer loans as a percentage of total consumer loans and as a percentage of impaired consumer loans ~~increased,~~decreased as the degree of overall impairment of our impaired consumer loans ~~became more~~was not as severe in ~~2017~~2019 compared to ~~2016, resulting~~2018, as a 1.0% decrease in allowance for credit losses for consumer loans from ￦294 billion as of December 31, 2018 to ￦291 billion as of December 31, 2019 was enhanced by both a ~~22.0%~~5.9% increase in the total amount of our consumer loans from ￦117,095 billion as of December 31, 2018 to ￦124,003 billion as of December 31, 2019 and a 6.9% increase in impaired consumer loans from ￦391 billion as of December 31, 2018 to ￦418 billion as of December 31, 2019.
During 2018, impaired consumer loans and net charge-offs, each as a percentage of total consumer loans, remained stable. However, allowance for credit losses for consumer loans as a percentage of total consumer loans and as a percentage of impaired consumer loans increased, primarily due to aone-off increase in allowance for credit losses for consumer loans in connection with the application of IFRS 9 in the opening balances as of January 1, 2018. Such increase contributed to a 43.4% increase in the level of our allowance for credit losses for consumer loans from ~~￦168 billion as of December 31, 2016 to~~ ￦205 billion as of December 31, 2017 to ￦294 billion as of December 31, 2018, which outpaced a ~~13.9%~~7.1% increase in total consumer loans from ￦109,290 billion as of December 31, 2017 to ￦117,095 billion as of December 31, 2018 as well as a 23.3% increase in impaired consumer loans from ~~￦303~~￦317 billion as of December 31, ~~2016~~2017 to ~~￦345~~￦391 billion as of December 31, ~~2017.~~
~~During 2016, impaired consumer loans and netcharge-offs~~ of consumer loans, each as a percentage of total consumer loans, decreased mainly as a result of an improvement in the overall credit quality of our consumer loans by increasing the proportion of such loans extended to consumer borrowers with higher credit scores and strengthening credit review and monitoring procedures, which was enhanced by an increase in the total amount of our consumer loans from ￦93,448 billion as of December 31, 2015 to ￦104,484 billion as of December 31, 2016. Allowance for credit losses for consumer loans as a percentage of impaired consumer loans also decreased, as the degree of impairment of our impaired consumer loans was not as severe in 2016 compared to 2015. Allowance for credit losses for consumer loans as a percentage of total consumer loans remained stable.2018.
The following table shows, for the ~~periods~~years indicated, certain information regarding our impaired credit card balances:

   As of December 31,    As of December 31,
   2015 2016 2017        2017         2018         2019
Impaired credit card balances as a percentage of total credit card balances⁽¹⁾
   2.4 % 2.3 % 2.2 %    2.6 % 2.6 % 2.7 %
Allowance for credit losses for credit card balances as a percentage of total credit card balances⁽¹⁾
   2.4 2.3 2.7    2.7 3.2 3.3
Allowance for credit losses for credit card balances as a percentage of impaired credit card balances⁽¹⁾
   101.4 102.0 102.2    102.2 124.4 120.2
Netcharge-offs of credit card balances as a percentage of total credit card balances⁽¹⁾
   2.7 3.0 2.6    2.6 2.3 2.6

⁽¹⁾
Includes corporate credit card balances.
During 2017, impaired credit card balances and net charge-offs of credit card balances, each as a percentage of total credit card balances, decreased mainly as a result of an improvement in the overall credit quality of our credit card portfolio, which was enhanced by an increase in the total amount of our credit card balances from ￦6,674 billion as of December 31, 2016 to ￦6,827 billion as of December 31, 2017. However, allowance for credit losses for credit card balances as a percentage of impaired credit card balances and as a percentage of total credit card balances increased, as the degree of overall impairment of our impaired credit card balances became more severe in 2017 compared to 2016, resulting in an increase in the level of our allowance for credit losses for credit card balances from ￦155 billion as of December 31, 2016 to ￦182 billion as of December 31, 2017.
~~During 2016,~~2019, impaired credit card balances and allowance for credit losses for credit card balances, each as a percentage of total credit card balances, ~~decreased~~increased mainly asdue to a ~~result of an improvement~~deterioration in the overall credit quality of our credit card ~~portfolio, which was enhanced by an increase in the total amount of our credit card balances from ￦6,099 billion as of December 31, 2015 to ￦6,674 billion as of December 31, 2016.~~portfolio. However, allowance for credit losses for credit card balances as a percentage of impaired credit card balances decreased, as a 5.4% increase in the level of our allowance for credit losses for credit card balances from ￦260 billion as of December 31, 2018 to ￦274 billion as of December 31, 2019 was outpaced by a 9.1% increase in impaired credit card balances from ￦209 billion as of December 31, 2018 to ￦228 billion as of December 31, 2019. Net charge-offs of credit card balances as a percentage of total credit card balances increased mainly as a result of a 19.5% increase in net charge-offs of credit card balances from
￦185 billion as of December 31, 2018 to ￦221 billion as of December 31, 2019, primarily due to the deterioration in the overall credit quality of our credit card portfolio.
During 2018, while impaired credit card balances as a percentage of total credit card balances remained ~~relatively~~ stable, ~~at 102.0%~~net charge-offs of credit card balances as a percentage of total credit card balances decreased mainly as a result of a 17.9% increase in ~~2016, compared~~the total amount of our credit card balances from ￦6,827 billion as of December 31, 2017 to ~~101.4%~~￦8,051 billion as of December 31, 2018. However, allowance for credit losses for credit card balances as a percentage of total credit card balances and as a percentage of impaired credit card balances increased, primarily due to aone-off increase in ~~2015.~~allowance for credit losses for credit card balances in connection with the application of IFRS 9 in the opening balances as of January 1, 2018, which contributed to a 42.9% increase in the level of our allowance for credit losses for credit card balances from ￦182 billion as of December 31, 2017 to ￦260 billion as of December 31, 2018.
Net Fees and Commissions Income
The following table shows, for the ~~periods~~years indicated, the components of our net fees and commissions income:

   Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016
   (in billions of Won) (%)
Fees and commissions income
   ￦ 1,757 ￦ 1,865 ￦ 2,069 6.1 % 10.9 %
Fees and commissions expense
   (781 ) (928 ) (999 ) 18.8 7.7


Total fees and commissions income, net
   ￦ 976 ￦ 937 ￦ 1,070 (4.0 )% 14.2 %


   Year ended December 31, Percentage change
   2017 2018 2019 2017/2018 2019/2018
   (in billions of Won) (%)
Fees and commissions income
   ￦ 2,069 ￦ 1,681 ￦ 1,709 (18.8 )% 1.7 %
Fees and commissions expense
   (999 ) (611 ) (607 ) (38.8 ) (0.7 )


Total fees and commissions income, net
   ￦ 1,070 ￦ 1,070 ￦ 1,103 0.0 3.1


Comparison of ~~2017~~2019 to ~~2016~~2018
Our net fees and commissions income increased ~~14.2%~~3.1% from ~~￦937 billion in 2016 to~~ ￦1,070 billion in ~~2017, as~~2018 to ￦1,103 billion in 2019, mainly due to a ~~10.9%~~1.7% increase in fees and commissions income from ~~￦1,865~~￦1,681 billion in ~~2016~~2018 to ~~￦2,069~~￦1,709 billion in ~~2017 outpaced~~2019, which was enhanced by a ~~7.7% increase~~0.7% decrease in fees and commissions expense from ~~￦928~~￦611 billion in ~~2016~~2018 to ~~￦999~~￦607 billion in ~~2017.~~ 2019.
The ~~10.9%~~1.7% increase in fees and commissions income was ~~mainly the result of~~primarily due to a ~~12.3%~~39.4% increase in ~~credit card~~ fees and commissions received on foreign exchange from ~~￦955~~￦66 billion in ~~2016~~2018 to ~~￦1,072~~￦92 billion in ~~2017, which primarily reflected an~~2019, a 17.7% increase in ~~the average volume of credit card receivables as well as an~~fees and commissions received on securities business from ￦96 billion in 2018 to ￦113 billion in 2019, a 9.8% increase in fees and commissions received related to credit ~~card issuances. Such increase was enhanced by~~from ￦173 billion in 2018 to ￦190 billion in 2019 and a ~~75.3%~~13.2% increase in ~~other fee income~~fees and commissions received for electronic finance from ~~￦93~~￦121 billion in ~~2016~~2018 to ~~￦163~~￦137 billion in ~~2017,~~2019, which were offset in part by an 8.3% decrease in fees and commissions received on credit cards from ￦599 billion in 2018 to ￦549 billion in 2019. The increase in fees and commissions received on foreign exchange was primarily attributable to an increase in ~~fee income~~foreign exchange transactions due to an expansion of our overseas operations, the increase in fees and commissions received on securities business was mainly due to the expansion of our asset management business, the increase in fees and commissions received related to credit was principally due to growth in our loan portfolio, and the increase in fees and commissions received for electronic finance was mainly attributable to the expansion of our online and electronic platforms. The decrease in fees and commissions received on credit cards was mainly due to a decrease in rates on credit card commissions received from ~~trust management services.~~ merchants in accordance with Government policy.
The ~~7.7% increase~~0.7% decrease in fees and commissions expense was ~~principally~~primarily due to ~~an 8.8% increase~~a 4.9% decrease in credit card commissions from ~~￦761~~￦429 billion in ~~2016~~2018 to ~~￦828~~￦408 billion in ~~2017,~~2019, which was offset in part by an 8.6% increase in fees and commissions paid from ￦175 billion in 2018 to ￦190 billion in 2019. The decrease in credit card commissions was mainly ~~reflected the increase~~due to a decrease in the average volume of our credit card receivables. The increase in fees and commissions paid was primarily attributable to increases in the fees and commissions paid with respect to overseas and agency-related transactions.
~~For further information regarding our~~
Comparison of 2018 to 2017
Our net fees and commissions income ~~see~~remained stable at ￦1,070 billion in 2017 and 2018, as an 18.8% decrease in fees and commissions income from ￦2,069 billion in 2017 to ￦1,681 billion in 2018 was offset by a 38.8% decrease in fees and commissions expense from ￦999 billion in 2017 to ￦611 billion in 2018.
The 18.8% decrease in fees and commissions income was primarily due to a 44.1% decrease in credit card fees from ￦1,072 billion in 2017 to ￦599 billion in 2018, which was mainly attributable to our adoption of IFRS 15 in 2018, pursuant to which rewards and points provided to credit card users are deducted from revenue as they are considered as consideration provided to customers. As a result of such change to our accounting policies, fees and commissions received on credit cards and fees and commissions paid on credit cards were both reduced by ￦526 billion in 2018. See Note 352-(6) of the notes to our consolidated financial statements included elsewhere in this annual report.
~~Comparison of 2016 to 2015~~
Our net fees and commissions income decreased 4.0% from ￦976 billion in 2015 to ￦937 billion in 2016, as an 18.8% increase in fees and commissions expense from ￦781 billion in 2015 to ￦928 billion in 2016 outpaced a 6.1% increase in fees and commissions income from ￦1,757 billion in 2015 to ￦1,865 billion in 2016. The ~~18.8% increase~~38.8% decrease in fees and commissions expense was ~~primarily~~principally due to ~~an 18.2% increase~~a 48.2% decrease in credit card commissions from ~~￦644~~￦828 billion in ~~2015~~2017 to ~~￦761~~￦429 billion in ~~2016,~~2018, which ~~mainly reflected an increase in the average volume of credit card receivables as well as an increase in credit card issuances. The 6.1% increase in fees and commissions income~~ was mainly ~~the result~~attributable to our adoption of ~~a 12.1% increase~~IFRS 15 in ~~credit card fees from ￦852 billion in 2015 to ￦955 billion in 2016, which primarily reflected the increase in the average volume of credit card receivables.~~2018, as discussed above.
For further information regarding our net fees and commissions income, see Note 3531 of the notes to our consolidated financial statements included elsewhere in this annual report.
Net Gain on Financial ~~Assets~~Instruments
The following table shows, for the ~~periods~~years indicated, the components of our net gain on financial ~~assets:~~instruments:

   Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016
   (in billions of Won) (%)
Gain (loss) on financial assets at fair value through profit or loss, net
   ￦ 240 ￦ 114 ￦ (105 ) (52.5 )% N/M ⁽²⁾
Gain (loss) onavailable-for-sale financial assets, net⁽¹⁾
   (3 ) (1 ) 193 (66.7 ) N/M ⁽²⁾


Total net gain on financial assets
   ￦ 237 ￦ 113 ￦ 88 (52.3 )% (22.1 )%


   Year ended December 31,    Percentage change
   2017 2018    2019    2018/2017 2019/2018
   (in billions of Won)    (%)
Net gain on financial instruments at fair value through profit or loss (IFRS 9)
   ￦ — ￦ 214    ￦ 25    N/A ⁽²⁾ (88.3 )%
Net gain (loss) on financial instruments at fair value through profit or loss (IAS 39)
   (105 ) —    —    N/A N/A
Net gain on financial assets at fair value through other comprehensive income
   — 2    11    N/A 450.0
Net gain (loss) onavailable-for-sale financial asset⁽¹⁾
   193 —    —    N/A N/A
Net gain arising on disposals of financial assets at amortized cost
   — 80    102    N/A 27.5





Total net gain on financial instruments
   ￦ 88 ￦ 296    ￦ 139    236.4 (53.0 )






⁽¹⁾
Includes impairment losses onavailable-for-sale financial assets of ~~￦135 billion in 2015, ￦50 billion in 2016 and~~ ￦31 billion in 2017.
⁽²⁾
N/MA = not ~~meaningful.~~applicable.
Comparison of ~~2017~~2019 to ~~2016~~2018
Our net gain on financial ~~assets~~instruments decreased ~~22.1%~~53.0% from ~~￦113~~￦296 billion in ~~2016~~2018 to ~~￦88~~￦139 billion in ~~2017,~~2019. This decrease was primarily ~~as a result of a change~~attributable to an 88.3% decrease in net gain ~~(loss)~~ on financial ~~assets~~instruments at fair value through profit or loss from ~~a net gain of ￦114~~￦214 billion in ~~2016~~2018 to ~~a net loss of ￦105~~￦25 billion in ~~2017,~~2019, which was partially offset by a ~~change~~27.5% increase in net gain ~~(loss)~~arising on~~available-for-sale~~ disposal of financial assets at amortized cost from ~~a net loss of ￦1~~￦80 billion in ~~2016~~2018 to ~~a net gain of ￦193~~￦102 billion in ~~2017.~~2019.
The ~~change~~88.3% decrease in net gain ~~(loss)~~ on financial assets at fair value through profit or loss was principally due to a 96.8% decrease in gain on financial assets held for trading from ￦186 billion in 2016 to ￦6 billion in 2017, which was enhanced by 56.3% increase in net loss on financial assets designated at fair value through profit or loss from ￦71 billion in 2016 to ￦111 billion in 2017. The 96.8% decrease in gain on financial assets held for trading was primarily due to a change in net gain (loss) on currency derivatives from a net gain of ￦121 billion in 2016 to a net loss of ￦155 billion in 2017, which was partially offset by a 235.3% increase in gains on equity derivatives from ￦34 billion in 2016 to ￦114 billion in 2017.
~~The 56.3% increase in net loss on financial assets designated~~instruments at fair value through profit or loss resulted mainly from a ~~47.4%~~70.1% decrease in gain on financial instruments at fair value through profit or loss mandatorily measured at fair value from ￦197 billion in 2018 to ￦59 billion in 2019. Such decrease was primarily attributable to an 85.0% decrease in net gain on the transaction and valuation of currency derivatives from ￦113 billion in 2018 to ￦17 billion in 2019, which was enhanced by a 127.1% increase in net loss on the transaction and valuation of interest rate derivatives from ￦48 billion in 2018 to ￦109 billion in 2019.
The 27.5% increase in net gain arising on disposals of financial assets at amortized cost was primarily attributable to a 29.1% increase in net gain arising on disposals of loans and other financial assets at amortized cost from ￦79 billion in 2018 to ￦102 billion in 2019. Such increase mainly reflected gains realized on sales of certain~~equity-linked~~non-performing project finance loans held by us in 2019.
Comparison of 2018 to 2017
Our net gain on financial instruments increased 236.4% from ￦88 billion in 2017 to ￦296 billion in 2018. This increase was primarily attributable to a change in net gain (loss) on financial instruments at fair value through profit or loss from a net loss of ￦105 billion in 2017 to a net gain of ￦214 billion in 2018. Financial instruments at fair value through profit or loss under IFRS 9 include all financial instruments at fair value through profit or loss that were classified as such under IAS 39 in 2017 as well as certain other financial instruments that were classified asavailable-for-sale financial assets and loans and receivables under IAS 39 in 2017. See Note2-(1)-1)-a) of the notes to our consolidated financial statements included elsewhere in this annual report. The effect of such change was partially offset by a 99.0% decrease in net gain onavailable-for-sale financial assets of ￦193 billion in 2017 compared to net gain on financial assets at fair value through other comprehensive income of ￦2 billion in 2018.
The change in net gain (loss) on financial instruments at fair value through profit or loss from a net loss to a net gain was principally the result of a significant increase in net gain on financial instruments held for trading of ￦6 billion in 2017 compared to net gain on financial instruments at fair value through profit or loss mandatorily measured at fair value of ￦197 billion in 2018, which was enhanced by a change to a net gain on financial instruments at fair value through profit or loss designated as upon initial recognition of ￦17 billion in 2018 compared to a net loss on financial instruments designated as at fair value through profit or loss of ￦111 billion in 2017. The significant increase in net gain on financial instruments held for trading in 2017 compared to net gain on financial instruments at fair value through profit or loss mandatorily measured at fair value in 2018 was primarily due to a significant increase in gains on valuation of securities from ~~￦76~~￦3 billion in ~~2016~~2017 to ￦137 billion in 2018, which was enhanced by a significant increase in net gain on transactions and valuation of derivatives held for trading from ￦3 billion in 2017 to ￦66 billion in 2018. Derivatives held for trading were classified as financial instruments held for trading under IAS 39 in 2017 but are classified since 2018 as financial instruments at fair value through profit or loss under IFRS 9. The change to a net gain on financial instruments at fair value through profit or loss designated as upon initial recognition in 2018, compared to a net loss on financial instruments designated as at fair value through profit or loss in 2017, resulted mainly from a change in net gain (loss) on equity-linked securities from a net loss of ￦112 billion in 2017 ~~which~~to a net gain of ￦16 billion in 2018.
The 99.0% decrease in net gain onavailable-for-sale financial assets compared to net gain on financial assets at fair value through other comprehensive income resulted mainly from a 99.1% decrease in gains on transaction of securities from ￦224 billion in 2017 to ￦2 billion in 2018. Such decrease was primarily attributable to ~~an increase~~the reclassification of certain equity and debt securities that were classified asavailable-for-sale financial assets in ~~losses on investments in securities linked~~2017 under IAS 39 to ~~certain indices. Such losses were offset in part~~classifications other than financial assets at fair value through ~~derivative transactions and fees and commissions~~other comprehensive income, ~~generated in connection therewith. For further information regarding our net gain (loss) on~~including financial assets at fair value through profit or loss ~~see~~and securities at amortized cost, in 2018 under IFRS 9. See Note 372-(1)-3)-a) of the notes to our consolidated financial statements included elsewhere in this annual report.
~~The change in net gain (loss) onavailable-for-sale~~ ~~financial assets was principally due to a more thanfour-fold~~ increase in gains on transaction of such securities from ￦48 billion in 2016 to ￦224 billion in 2017. Such increase mainly reflected an increase in the number of such transactions in 2017 compared to 2016.
~~Unrealized gains and losses (other than impairment losses) onavailable-for-sale~~ ~~financial assets are recorded in our statement of financial position as part of accumulated other comprehensive income, under other equity. In 2017, we recognized a net loss on valuation ofavailable-for-sale~~ ~~financial assets of ￦85 billion as part of other comprehensive income (loss) net of tax.~~
~~Comparison of 2016 to 2015~~
Our net gain on financial assets decreased 52.3% from ￦237 billion in 2015 to ￦113 billion in 2016, primarily as a result of a 52.5% decrease in net gain on financial assets at fair value through profit or loss from ￦240 billion in 2015 to ￦114 billion in 2016.
The 52.5% decrease in net gain on financial assets at fair value through profit or loss was principally due to a change in net gain (loss) on financial assets designated at fair value through profit or loss from a net gain of ￦69 billion in 2015 to a net loss of ￦71 billion in 2016. Such change in net gain (loss) on financial assets designated at fair value through profit or loss resulted mainly from a change in net gain (loss) on~~equity-linked~~ securities from a net gain of ￦68 billion in 2015 to a net loss of ￦76 billion in 2016, which was primarily attributable to an increase in losses on investments in securities linked to certain foreign indices. For further information regarding our net gain ~~(loss)~~ on financial ~~assets at fair value through profit or loss,~~instruments, see ~~Note 37~~Notes 33 and 34 of the notes to our consolidated financial statements included elsewhere in this annual report.
~~In 2016, we recognized a net gain on valuation ofavailable-for-sale~~ ~~financial assets of ￦13 billion as part of other comprehensive income (loss) net of tax.~~
General and Administrative Expenses
The following table shows, for the ~~periods~~years indicated, the components of our general and administrative expenses:

   Year ended December 31,    Percentage change
   2015    2016    2017    2016/2015 2017/2016
   (in billions of Won)    (%)
Employee benefits
   ￦ 1,853    ￦ 2,125    ￦ 2,324    14.7 % 9.4 %
Depreciation and amortization
   237    248    184    4.6 (25.8 )
Other general and administrative expenses
   1,061    1,105    1,023    4.1 (7.4 )







General and administrative expenses
   ￦ 3,151    ￦ 3,478    ￦ 3,531    10.4 % 1.5 %







   Year ended December 31,    Percentage change
   2017    2018    2019    2018/2017 2019/2018
   (in billions of Won)    (%)
Employee benefits
   ￦ 2,324    ￦ 2,322    ￦ 2,391    (0.1 )% 3.0 %
Depreciation and amortization
   184    217    481    17.9 121.7
Other general and administrative expenses
   1,023    1,085    894    6.1 (17.6 )







General and administrative expenses
   ￦ 3,531    ￦ 3,624    ￦ 3,766    2.6 3.9







Comparison of ~~2017~~2019 to ~~2016~~2018
Our general and administrative expenses increased ~~1.5%~~3.9% from ~~￦3,478~~￦3,624 billion in ~~2016~~2018 to ~~￦3,531~~￦3,766 billion in ~~2017,~~2019, primarily as a result of a ~~9.4%~~121.7% increase in ~~employee benefits~~depreciation and amortization expenses from ~~￦2,125~~￦217 billion in ~~2016~~2018 to ~~￦2,324~~￦481 billion in ~~2017,~~2019, which was partially offset by a ~~7.4%~~17.6% decrease in other general and administrative expenses from ~~￦1,105~~￦1,085 billion in ~~2016~~2018 to ~~￦1,023~~￦894 billion in ~~2017 and a 25.8% decrease~~2019.
The 121.7% increase in depreciation and amortization ~~from ￦248 billion in 2016 to ￦184 billion in 2017. The 9.4% increase in employee benefits~~expenses was principally due to ~~a 67.6% increase~~our adoption of IFRS 16, which resulted in redundancy payments from ￦179 billion in 2016 to ￦300 billion in 2017, resulting mainly from the early retirement program we implemented in September 2017. Such increase was enhanced by a 19.9% increase in other~~short-term~~ ~~employee benefits from ￦467 billion in 2016 to ￦560 billion in 2017, which mainly reflected~~ an increase in ~~benefit levels for our employees. The 7.4% decrease~~lease amortization expenses that was offset in ~~other general and administrative expenses was mainly due to an 18.8% decrease in service charges from ￦245 billion in 2016 to ￦199 billion in 2017, principally reflecting~~part by a decrease in rent expenses. For additional information on IFRS 16 and the ~~number~~impact of its application to our ~~banking branches,~~consolidated financial statements, see Notes2-(1)-1)-a) and a 32.9% decrease in miscellaneous other expenses from ￦70 billion in 2016 to ￦47 billion in 2017. The 25.8% decrease in depreciation and amortization was also mainly due to the decrease in the number of our banking branches.
~~For further information regarding our general and administrative expenses, seeNote 40-(1)~~b) of the notes to our consolidated financial statements included elsewhere in this annual report. The 17.6% decrease in other general and administrative expenses was primarily due to a 73.2% decrease in rent expenses from ￦321 billion in 2018 to ￦86 billion in 2019, which was principally due to our adoption of IFRS 16, as discussed above.
Comparison of ~~2016~~2018 to ~~2015~~2017
Our general and administrative expenses increased ~~10.4%~~2.6% from ~~￦3,151~~￦3,531 billion in ~~2015~~2017 to ~~￦3,478~~￦3,624 billion in ~~2016,~~2018, primarily as a result of a ~~14.7% increase in employee benefits from ￦1,853 billion in 2015 to ￦2,125 billion in 2016, which was enhanced by a 4.1%~~6.1% increase in other general and administrative expenses from ~~￦1,061~~￦1,023 billion in ~~2015~~2017 to ~~￦1,105~~￦1,085 billion in 2016. The 14.7% increase in employee benefits was principally due to a 145.2% increase in redundancy payments from ￦73 billion in 2015 to ￦179 billion in 2016, resulting mainly from our implementation of an early retirement program in April and December 2016. Such increase2018, which was enhanced by a ~~22.6%~~17.9% increase in ~~othershort-term~~ ~~employee benefits~~depreciation and amortization expenses from ~~￦381~~￦184 billion in ~~2015~~2017 to ~~￦467~~￦217 billion in ~~2016 and a 4.8% increase inshort-term~~ ~~employee salaries from ￦1,263 billion in 2015 to ￦1,323 billion in 2016, both of which mainly reflected increases in benefit levels and average wages of our employees.~~ 2018.
The ~~4.1%~~ increase in other general and administrative expenses was ~~mainly~~primarily due to a ~~28.8%~~12.1% increase in ~~advertising expense~~service charges from ~~￦59~~￦199 billion in ~~2015~~2017 to ~~￦76~~￦223 billion in ~~2016,~~2018 and a 25.4% increase in computer andIT-related expenses from ￦71 billion in 2017 to ￦89 billion in 2018. The increase in service charges was principally ~~reflecting our increased marketing efforts, as well~~due to higher rates charged by service providers as a ~~5.4%~~result of an increase in ~~rent~~the national minimum wage under Korean law, while the increase in computer andIT-related expenses resulted mainly from ~~￦296 billion~~the incurrence of additional expenses relating to an upgrade of our computer systems, which was completed in ~~2015~~May 2018.
The 17.9% increase in depreciation and amortization was mainly related to ~~￦312 billion in 2016.~~the upgrade of our computer systems during 2018, as discussed above.
For further information regarding our general and administrative expenses, seeNote ~~40-~~36-(1) of the notes to our consolidated financial statements included elsewhere in this annual report.
Other Net ~~Other~~ Operating Expenses
The following table shows, for the ~~periods~~years indicated, the components of our other net ~~other~~ operating expenses:

   Year ended December 31, Percentage change    Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016    2017 2018 2019 2018/2017 2019/2018
   (in billions of Won) (%)    (in billions of Won) (%)
Other operating income
   ￦ 3,782 ￦ 5,208 ￦ 3,737 37.7 % (28.2 )%    ￦ 3,736 ￦ 1,389 ￦ 775 (62.8 )% (44.2 )%
Other operating expenses
   (4,392 ) (5,575 ) (3,768 ) 26.9 (32.4 )    (3,768 ) (1,783 ) (1,077 ) (52.7 ) (39.6 )




Total net other operating expenses
   ￦ (610 ) ￦ (367 ) ￦ (31 ) (39.8 )% (91.6 )%
Total other net operating expenses
   ￦ (31 ) ￦ (394 ) ￦ (303 ) 1,171.0 (23.1 )




Comparison of ~~2017~~2019 to ~~2016~~2018
Our other net ~~other~~ operating expenses decreased ~~91.6%~~23.1% from ~~￦367~~￦394 billion in ~~2016~~2018 to ~~￦31~~￦303 billion in ~~2017, primarily due~~2019, as a 44.2% decrease in other operating income from ￦1,389 billion in 2018 to ￦775 billion in 2019 was more than offset by a ~~32.4%~~39.6% decrease in other operating expenses from ~~￦5,575~~￦1,783 billion in ~~2016~~2018 to ~~￦3,768~~￦1,077 billion in ~~2017, which was partially offset by a 28.2% decrease in other operating income from ￦5,208 billion in 2016 to ￦3,737 billion in 2017.~~2019.
Other operating income includes principally gains on ~~transaction~~transactions of foreign exchange, gains ~~on disposal of loans and receivables,~~related to derivatives, gains on fair value of hedged items and miscellaneous other operating income. The ~~28.2%~~44.2% decrease in other operating income was mainly attributable ~~mainly~~ to a ~~29.2%~~51.0% decrease in gains on ~~transaction~~transactions of foreign exchange from ~~￦4,792~~￦1,228 billion in ~~2016~~2018 to ~~￦3,391~~￦602 billion in ~~2017.~~2019. This decrease, which ~~primarily reflected lower exchange rate volatility~~was principally due to the overall depreciation of the Won in ~~2017,~~2019 compared to 2018, was more than offset by a greater decrease in ~~loss~~losses on transactions of foreign exchange from ￦991 billion in 2018 to ￦192 billion in 2019, which is recorded as part of other operating expenses.On a net basis, net gains on transactions of foreign exchange increased 73.0% from ￦237 billion in 2018 to ￦410 billion in 2019.
Other operating expenses include principally losses on transaction of foreign exchange, KDIC deposit insurance premiums, contributions to miscellaneous funds, losses related to derivatives, losses on fair value hedged items and miscellaneous other operating expenses. The 39.6% decrease in other operating expenses was primarily the result of an 80.6% decrease in losses on transactions of foreign exchange from ￦991 billion in 2018 to ￦192 billion in 2019, which mainly reflected the overall depreciation of the Won in 2019 compared to 2018.This decrease was partially offset by a decrease in gains on transaction of foreign exchange, which is recorded as part of other operating income as discussed above.
Comparison of 2018 to 2017
Our other net operating expenses increased significantly from ￦31 billion in 2017 to ￦394 billion in 2018, as a 62.8% decrease in other operating income from ￦3,736 billion in 2017 to ￦1,389 billion in 2018 outpaced a 52.7% decrease in other operating expenses from ￦3,768 billion in 2017 to ￦1,783 billion in 2018.
The 62.8% decrease in other operating income was mainly attributable to a 63.8% decrease in gains on transactions of foreign exchange from ￦3,391 billion in 2017 to ￦1,228 billion in 2018. This decrease, which was principally due to lower exchange rate volatility in 2018, was partially offset by a 65.7% decrease in losses on transactions of foreign exchange from ￦2,887 billion in 2017 to ￦991 billion in 2018, which is recorded as part of other operating expenses. On a net basis, ~~our~~ net ~~gain~~gains on ~~transaction~~transactions of foreign exchange ~~increased more thanfive-fold~~decreased 53.0% from ~~￦86 billion in 2016 to~~ ￦504 billion in ~~2017. The~~2017 to ￦237 billion in 2018.The decrease in gains on ~~transaction~~transactions of foreign exchange was enhanced by a ~~45.5%~~100.0% decrease in gains on ~~fair value hedged items~~disposals of loans and receivables from ~~￦99 billion in 2016 to ￦54~~￦205 billion in 2017 ~~as well as~~to nil in 2018, which reflected the change in classification of gains and losses on disposal of loans and receivables to “net gain (loss) arising on disposal of financial assets at amortized costs, which is part of “net gain on financial instruments,” under IFRS 9. We recognized a ~~23.2% decrease in other miscellaneous operating income from ￦112~~net gain arising on disposal of financial assets at amortized cost of ￦80 billion in 2016 to ￦86 billion in 2017, which was primarily due to a 60.7% decrease in amounts receivable from other creditor financial institutions under the terms of borrower debt restructuring programs from ￦75 billion in 2016 to ￦29 billion in 2017.2018.
Other operating expenses include principally losses on transaction of foreign exchange, deposit insurance premiums, contributions to miscellaneous funds, losses related to derivatives and miscellaneous other operating expenses. The ~~32.4%~~52.7% decrease in other operating expenses was primarily the result of a ~~38.7%~~65.7% decrease in ~~loss~~losses on ~~transaction~~transactions of foreign exchange from ~~￦4,706 billion in 2016 to~~ ￦2,887 billion in 2017 to ￦991 billion in 2018, which mainly reflected lower exchange rate volatility in ~~2017.~~2018. This decrease was ~~partially~~more than offset by a decrease in gains on transaction of foreign exchange, which is recorded as part of other operating income as discussed above.
For further information regarding our other net ~~other~~ operating ~~expense,~~expenses, seeNotes ~~40-(2)~~ ~~and (3) of the notes to our consolidated financial statements included elsewhere in this annual report.~~
~~Comparison of 2016 to 2015~~
Our net other operating expenses decreased 39.8% from ￦610 billion in 2015 to ￦367 billion in 2016, as the effect of a 26.9% increase in other operating expenses from ￦4,392 billion in 2015 to ￦5,575 billion in 2016 was more than offset by a 37.7% increase on other operating income from ￦3,782 billion in 2015 to ￦5,208 billion in 2016.
The 37.7% increase in other operating income was attributable mainly to a 43.0% increase in gains on transaction of foreign exchange from ￦3,352 billion in 2015 to ￦4,792 billion in 2016. This increase, which was principally due to higher exchange rate volatility in 2016, was partially offset by an increase in loss on transaction of foreign exchange, which is recorded as part of other operating expenses. On a net basis, our net gain (loss) on transaction of foreign exchange changed from a net loss of ￦78 billion in 2015 to a net gain of ￦86 billion in 2016. The increase in gains on transaction of foreign exchange was enhanced by a more than three-fold increase in gains on fair value hedged items from ￦25 billion in 2015 to ￦99 billion in 2016. Such increases were offset in part by a 100% decrease in gains on transaction of derivatives from ￦59 billion in 2015 to less than ￦1 billion in 2016, as well as a 29% decrease in miscellaneous other income from ￦159 billion in 2015 to ￦112 billion in 2016, which was primarily due to a decrease in amounts receivable from other creditor institutions under the terms of borrower debt restructuring programs from ￦137 billion in 2015 to ￦75 billion in 2016.
The 26.9% increase in other operating expenses was primarily the result of a 37.2% increase in loss on transaction of foreign exchange from ￦3,430 billion in 2015 to ￦4,706 billion in 2016, which mainly reflected higher exchange rate volatility during 2016. This increase was more than offset by an increase in gains on transaction of foreign exchange, which is recorded as part of other operating income as discussed above. The increase in loss on transaction of foreign exchange was enhanced by a more than four-fold increase in losses related to derivatives from ￦21 billion in 2015 to ￦99 billion in 2016. Such increases were offset in part by a 26.3% decrease in miscellaneous other operating expenses from ￦232 billion in 2015 to ￦171 billion in 2016, which was primarily due to a 29.7% decrease in amounts payable to other creditor financial institutions under the terms of borrower debt restructuring programs from ￦155 billion in 2015 to ￦109 billion in 2016, as well as a 100.0% decrease in losses on fair value hedged items from ￦57 billion in 2015 to less than ￦1 billion in 2016.
~~For further information regarding our net other operating expense, seeNotes 40-~~36-(2) and (3) of the notes to our consolidated financial statements included elsewhere in this annual report.
Net OtherNon-operating Income (Expenses)
The following table shows, for the years indicated, the components of our other netnon-operating income (expenses):
   Year ended December 31, Percentage change
   2017 2018 2019 2018/2017 2019/2018
   (in billions of Won) (%)
Othernon-operating income
   ￦ 84 ￦ 130 ￦ 68 54.8 % (47.7 )%
Othernon-operating expenses
   (190 ) (87 ) (229 ) (54.2 ) 163.2


Total net othernon-operating income (expenses)
   ￦ (106 ) ￦ 43 ￦ (161 ) N/M ⁽¹⁾ N/M


⁽¹⁾
N/M = not meaningful.
Comparison of 2019 to 2018
Our net othernon-operating income (expenses) changed from net income of ￦43 billion in 2018 to net expense of ￦161 billion in 2019, as a 163.2% increase in othernon-operating expenses from ￦87 billion in 2018 to ￦229 billion in 2019 was enhanced by a 47.7% decrease in othernon-operating income from ￦130 billion in 2018 to ￦68 billion in 2019.
Other non-operating expenses include principally depreciation on investment properties, interest expenses of refundable deposits, losses on disposal of investment in joint ventures and associates, losses on disposal of premises and equipment, intangible assets and other assets, impairment losses on premises and equipment, intangible assets and other assets, donations and miscellaneous othernon-operating expenses. The 163.2% increase in othernon-operating expenses was mainly attributable to a significant increase in miscellaneous othernon-operating expenses from ￦26 billion in 2018 to ￦132 billion in 2019, which was principally due to an increase in provisions relating to the estimated reimbursements and other payments in connection with Woori Bank’s sale of derivative-linked fund and securities products tied to yields on treasury bonds of Germany, the United Kingdom and the United States. See “Item 8.A. Consolidated Statements and Other Financial Information—Legal Proceedings and Regulatory Actions—Woori Bank” and Note23-(5)-2) of the notes to our consolidated financial statements included elsewhere in this annual report.
Othernon-operating income includes principally rental fee income, gain on disposal of investment in joint ventures and associates, gain on disposal of premises and equipment, intangible assets and other assets, reversal of impairment loss on premises and equipment, intangible assets and other assets and miscellaneous othernon-operating income. The 47.7% decrease in othernon-operating income was primarily attributable to a 100.0% decrease in gains on disposal of investment in joint ventures and associates from ￦51 billion in 2018 to nil in 2019, which was due to gains recognized in 2018 on the disposal of certain investments in joint ventures and associates after improvements in their financial condition, which were not repeated in 2019.
Comparison of 2018 to 2017
Our net othernon-operating income (expenses) changed from net expenses of ￦106 billion in 2017 to net income of ￦43 billion in 2018, as a 54.8% increase in othernon-operating income from ￦84 billion in 2017 to ￦130 billion in 2018 was enhanced by a 54.2% decrease in othernon-operating expenses from ￦190 billion in 2017 to ￦87 billion in 2018.
The 54.8% increase in othernon-operating income was primarily attributable to gains recognized in 2018 on the disposal of certain investments in joint ventures and associates after improvements in their financial condition.
The 54.2% decrease in othernon-operating expenses was mainly attributable to a 46.9% decrease in donations from ￦98 billion in 2017 to ￦52 billion in 2018, primarily reflecting our donation of issuance fees of dormant cashier’s checks for the preceding five years to the Korea Inclusive Finance Agency in 2017 in accordance with the amended Microfinance Support Act, which significantly decreased in 2018. Such decrease
was enhanced by a 92.3% decrease in losses on disposal of investment in joint ventures and associates from ￦39 billion in 2017 to ￦3 billion in 2018, which was principally due to a decrease in the number of such transactions in 2018 compared to 2017.
For further information regarding our net othernon-operating income (expenses), see Notes37-(3) and (4) of the notes to our consolidated financial statements included elsewhere in this annual report.
Share of ~~Losses of~~Gain (Loss) on Joint Ventures and Associates
Comparison of ~~2017~~2019 to ~~2016~~2018
Our share of ~~losses of~~gain on joint ventures and associates significantly increased ~~more than five-fold~~ from ~~￦20~~￦3 billion in ~~2016~~2018 to ~~￦101~~￦84 billion ~~in 2017.~~2019. Such increase was primarily ~~attributable~~due to a significant increase in our gains on valuation of investments in joint ventures and associates from ￦26 billion in 2018 to ￦104 billion in 2019, resulting mainly from the share of profits from Lotte Card Co., Ltd., in which we acquired a 20% equity interest in October 2019. See “Item 4.B. Business Overview—Credit Cards.”
Comparison of 2018 to 2017
Our share of gain (loss) on joint ventures and associates changed from a loss of ￦102 billion in 2017 to a gain of ￦3 billion in 2018. Such change was primarily due to a significant decrease in impairment losses from ~~￦1 billion in 2016 to~~ ￦115 billion in 2017 ~~which~~to less than ￦1 billion in 2018, resulting mainly ~~reflected~~from a ￦103 billion impairment loss we recorded in 2017 in respect of our 14.2% equity interest in Kumho Tire Co., Inc. (which we had acquired in 2010 as a result of adebt-to-equity swap in connection with its workout), due to further deterioration in its financial condition in ~~2017. For further information regarding our investments in joint ventures and associates, see Note 13 of the notes to our consolidated financial statements included elsewhere in this annual report.~~
~~Comparison of 2016 to 2015~~
~~Our share of losses of joint ventures and associates decreased 72.1% from ￦70 billion in 2015 to ￦20 billion in 2016. Such decrease~~2017, which was primarily attributable to a significant decrease in impairment losses from ￦56 billion in 2015 to ￦1 billion in 2016, which mainly reflected impairment losses we had recorded in respect of our equity interests in Osung LST Co., Ltd. and Poonglim Industrial Co., Ltd. in 2015, which were not repeated in ~~2016.~~ 2018. We no longer hold an equity interest in Kumho Tire Co., Inc. as a result of our loss of significant influence over the entity due to termination of the joint management procedures of the creditor financial institutions in 2018.
For further information regarding our investments in joint ventures and associates, see Note 13 of the notes to our consolidated financial statements included elsewhere in this annual report.
~~Other NetNon-operating~~ ~~Income (Loss)~~
~~The following table shows, for the periods indicated, the components of our other netnon-operating~~ ~~income (loss):~~

   Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016
   (in billions of Won) (%)
Othernon-operating income
   ￦ 273 ￦ 132 ￦ 84 (51.6 )% (36.4 )%
Othernon-operating expenses
   (102 ) (133 ) (190 ) 30.4 42.9


Total other netnon-operating income (loss)
   ￦ 171 ￦ (1 ) ￦ (106 ) N/M ⁽¹⁾ N/M ⁽¹⁾


⁽¹⁾ ~~N/M = not meaningful.~~
~~Comparison of 2017 to 2016~~
~~Our net other netnon-operating~~ ~~loss increased significantly from ￦1 billion in 2016 to ￦106 billion in 2017, as the effect of a 42.9% increase in othernon-operating~~ ~~expenses from ￦133 billion in 2016 ￦190 billion in 2017 was enhanced by a 36.4% decrease in othernon-operating~~ ~~income from ￦132 billion in 2016 to ￦84 billion in 2017.~~
~~Othernon-operating~~ ~~income includes principally gains on disposal of investment in joint ventures and associates, gains on disposal of premises and equipment and other assets, rental income and miscellaneous othernon-operating~~ ~~income. The 36.4% decrease in othernon-operating~~ ~~income was attributable mainly to a 66.7% decrease in miscellaneous othernon-operating~~ income from ￦96 billion in 2016 to ￦32 billion in 2017, which was partially offset by a 73.9% increase in gains on disposal of investment in joint ventures and associates from ￦23 billion in 2016 to ￦40 billion in 2017. The increase in gains on disposal of investment in joint ventures and associates was primarily attributable to an increase in the number of such transactions in 2017 compared to 2016.
~~Othernon-operating~~ ~~expenses include principally donations, depreciation on investment properties, losses on disposal of investment in joint ventures and associates and miscellaneous othernon-operating~~ ~~expenses. The 42.9% increase in othernon-operating~~ expenses was attributable mainly to a 122.7% increase in donations from ￦44 billion in 2016 to ￦98 billion in 2017 and a 160.0% increase in losses on disposal of investment in joint ventures and associates from ￦15 billion in 2016 to ￦39 billion in 2017, which were partially offset by a 35.6% decrease in miscellaneous other~~non-operating~~ ~~expenses from ￦59 billion in 2016 to ￦38 billion in 2017. The~~
increase in donations mainly reflected our donation of issuance fees of dormant cashier’s checks for the past five years to the Korea Inclusive Finance Agency in accordance with the amended Microfinance Support Act. The increase in losses on disposal of investment in joint ventures and associates was primarily attributable to an increase in the number of such transactions in 2017 compared to 2016.
~~Comparison of 2016 to 2015~~
~~Our net other netnon-operating~~ ~~income (loss) changed from net income of ￦171 billion in 2015 to a net loss of ￦1 billion in 2016, as the effect of a 51.6% decrease in othernon-operating~~ ~~income from ￦273 billion in 2015 to ￦132 billion in 2016 was enhanced by a 30.4% increase in othernon-operating~~ ~~expenses from ￦102 billion in 2015 to ￦133 billion in 2016.~~
~~The 51.6% decrease in othernon-operating~~ ~~income was attributable mainly to a 50.8% decrease in miscellaneous othernon-operating~~ income from ￦195 billion in 2015 to ￦96 billion in 2016, which was enhanced by a 62.9% decrease in gains on disposal of investment in joint ventures and associates from ￦62 billion in 2015 to ￦23 billion in 2016. The decrease in miscellaneous other~~non-operating~~ income mainly reflected a gain of ￦133 billion recognized in 2015 as a result of a judgment in favor of us and the other plaintiffs in a lawsuit against member companies of the Samsung Group for payment of guarantees they had provided to the plaintiffs in respect of certain obligations of Samsung Motors, a former affiliate, which was not repeated in 2016. The decrease in gains on disposal of investment in joint ventures and associates was attributable mainly to the recognition of negative goodwill in connection with our conversion of certain convertible bonds held as investment assets in 2015, which was not repeated to the same degree in 2016.
~~The 30.4% increase in othernon-operating~~ expenses was attributable mainly to an increase in losses on disposal of investment in joint ventures and associates from less than ￦1 billion in 2015 to ￦15 billion in 2016 and a 28.3% increase in miscellaneous other~~non-operating~~ ~~expenses from ￦46 billion in 2015 to ￦59 billion in 2016.~~
Income Tax Expense
Our income tax expense is calculated by adding or subtracting changes in deferred income tax liabilities and assets to income tax amounts payable for the period. Deferred tax assets are recognized for deductible temporary differences, including operating losses and tax creditcarry-forwards, while deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are those between the carrying values of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets, including thecarry-forwards of unused tax losses, are recognized to the extent it is probable that the deferred tax assets will be realized.
Comparison of ~~2017~~2019 to ~~2016~~2018
Income tax expense decreased 9.0% from ￦753 billion in 2018 to ￦685 billion in 2019, mainly as a result of a decrease in our net income before income tax expense, as well as a negative tax adjustment recognized in 2019 in respect of prior periods compared to a positive tax adjustment recognized in 2018. Our effective tax rate was 26.9% in 2018 and 25.2% in 2019.
Comparison of 2018 to 2017
Income tax expense increased ~~51.8%~~79.7% from ~~￦276 billion in 2016 to~~ ￦419 billion in 2017 to ￦753 billion in 2018, mainly as a result of an increase in our net income before income tax expense, as well as an increase in the ~~effect of which was enhanced by decreases innon-exempt~~applicable corporate income ~~and tax adjustments recognized in respect of prior periods. The statutory~~ tax rate ~~was~~in Korea, inclusive of local income surtax, from 24.2% ~~forpre-tax~~ ~~income over ￦20 billion~~ in ~~2016 and 2017.~~2017 to 27.5% in 2018. Our effective tax rate was ~~17.8% in 2016 and~~ 21.5% in ~~2017. See Note 42 of the notes to~~2017 and 26.9% in 2018.
For further information regarding our ~~consolidated financial statements included elsewhere in this annual report.~~
~~Comparison of 2016 to 2015~~
~~Income tax expense decreased 26.8% from ￦377 billion in 2015 to ￦276 billion in 2016 despite a 7.0% increase in our net income before~~ income tax expense, from ￦1,452 billion in 2015 to ￦1,553 billion in 2016. The decrease in income tax expense resulted primarily from a change in other miscellaneous tax adjustments from a net expense of ￦59 billion in 2015 to a net benefit of ￦16 billion in 2016, which was attributable mainly to a decrease in foreign withholding tax payments, as well as a decrease in~~non-deductible~~ ~~expenses. The statutory tax rate was 24.2% forpre-tax~~ ~~income over ￦20 billion in 2015 and 2016. Our effective tax rate was 25.9% in 2015 and 17.8% in 2016. See~~see Note 4238 of the notes to our consolidated financial statements included elsewhere in this annual report.
Net Income
Due to the factors described above, we recorded net income of ￦2,038 billion in 2019, compared to ￦2,052 billion in 2018 and ￦1,530 billion in ~~2017, compared to ￦1,277 billion in 2016 and ￦1,075 billion in 2015.~~2017.
Results by Principal Business Segment
We compile and analyze financial information for our business segments based upon segment information used by our management for the purposes of resource allocation and performance evaluation. We currently have ~~six~~four operational business segments: ~~consumer~~ banking, ~~corporate banking,~~credit card, investment banking ~~capital markets, credit card~~ and other operations.
The following table shows, for the ~~periods~~years indicated, our results of operations by segment:

   Net income
Year ended December 31,    Total operating income⁽¹⁾
Year ended December 31,
   2015    2016 2017    2015    2016    2017
   (in billions of Won)
Consumer banking
   ￦ 26    ￦ 99 ￦ 264    ￦ 54    ￦ 166    ￦ 446
Corporate banking
   317    610 918    418    815    1,217
Investment banking
   165    84 106    174    65    100
Capital markets
   11    (3 ) 92    15    1    122
Credit card
   117    109 101    155    144    138
Other operations
   552    514 22    551    441    73










Total⁽²⁾
   ￦ 1,188    ￦ 1,413 ￦ 1,503    ￦ 1,367    ￦ 1,632    ￦ 2,096










   Net incomeYear ended December 31,    Total operating income⁽¹⁾Year ended December 31,
   2017    2018    2019    2017    2018    2019
   (in billions of Won)
Banking
   ￦ 1,354    ￦ 1,916    ￦ 1,862    ￦ 1,905    ￦ 2,559    ￦ 2,629
Credit card
   101    127    114    138    172    136
Investment banking
   20    33    53    22    33    56
Others
   —    3    633    6    5    636












Total
   ￦ 1,476    ￦ 2,079    ￦ 2,663    ￦ 2,071    ￦ 2,770    ￦ 3,458












⁽¹⁾
Comprises net interest income and netnon-interest income after administrative expenses and impairment losses due to credit losses.
⁽²⁾
Before adjustments for consolidation, inter-segment transactions ~~(other thaninter-segment~~ ~~loans and borrowings)~~ and certain differences in classification under our management reporting system.
~~Consumer~~ Banking
This segment primarily consists of ~~our consumer~~the banking ~~operations.~~operations of Woori Bank and its overseas subsidiaries. Woori Bank provides a wide range of banking and other financial services to large corporations, small- andmedium-sized enterprises and individuals in Korea. The following table shows, for the ~~periods~~years indicated, our income statement data for this segment:

   Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016
   (in billions of Won) (%)
Income statement data

Interest income
   ￦ 2,851 ￦ 2,980 ￦ 3,150 4.5 % 5.7 %
Interest expense
   (1,228 ) (1,024 ) (956 ) (16.6 ) (6.6 )
Inter-segment
   (334 ) (472 ) (491 ) 41.3 4.0


Net interest income
   1,289 1,484 1,703 15.1 14.8
Non-interest income
   886 924 802 4.3 (13.2 )
Non-interest expense
   (353 ) (406 ) (254 ) 15.0 (37.4 )
Inter-segment
   22 39 102 77.3 161.5


Netnon-interest income
   555 557 650 0.4 16.7
Administrative expenses
   (1,782 ) (1,788 ) (1,809 ) 0.3 1.2
Impairment losses due to credit loss and others⁽¹⁾
   (8 ) (87 ) (98 ) 987.5 12.6


Total other expenses
   (1,790 ) (1,875 ) (1,907 ) 4.7 1.7


Operating income
   54 166 446 207.4 168.7


Netnon-operating loss
   (19 ) (35 ) (98 ) 84.2 180.0


Net income before tax
   35 131 348 274.3 165.6


Income tax expense
   (9 ) (32 ) (84 ) 255.6 162.5


Net income
   ￦ 26 ￦ 99 ￦ 264 280.8 % 166.7 %


   Year ended December 31, Percentage change
   2017 2018 2019 2018/2017 2019/2018
   (in billions of Won) (%)
Income statement data

Net interest income
   ￦ 4,083 ￦ 4,454 ￦ 4,583 9.1 % 2.9 %
Non-interest income
   1,518 1,517 1,557 (0.1 ) 2.6
Reversal of (provision for) impairment losses due to credit loss and others⁽¹⁾
   (366 ) 5 (33 ) N/M ⁽³⁾ N/M
General administrative expenses⁽²⁾
   (3,330 ) (3,416 ) (3,479 ) 2.6 1.8


Net operating income
   1,905 2,559 2,629 34.3 2.7
Non-operating income (expense)
   (172 ) 70 (151 ) N/M N/M


Net income before tax
   1,733 2,629 2,478 51.7 (5.7 )
Tax expense
   (378 ) (713 ) (616 ) 88.6 (13.6 )


Net income
   ￦ 1,354 ￦ 1,916 ￦ 1,862 41.5 (2.8 )


⁽¹⁾
Consist of reversal of (provision for) impairment losses due to credit loss and others, gain (loss) on loan sales and reversal of provisions ~~(reversal of provisions).~~
~~Comparison of 2017 to 2016~~
Our net income before tax for this segment increased 165.6% from ￦131 billion in 2016 to ￦348 billion in 2017. Net income after tax also increased 166.7% from ￦99 billion in 2016 to ￦264 billion in 2017.
Interest income for this segment increased 5.7% from ￦2,980 billion in 2016 to ￦3,150 billion in 2017, primarily due to an increase in the average balances of general purpose household loans (including home equity loans) and mortgage loans, mainly reflecting increased demand for such loans among consumers, which was enhanced by a slight increase in the average yields on such loans, principally as a result of an increase in interest rates for loans in Korea commencing in the second half of 2017.
Interest expense attributable to this segment decreased 6.6% from ￦1,024 billion in 2016 to ￦956 billion in 2017. The decrease in interest expense was primarily due to a decrease in the average cost of time and savings deposits held by consumers, which was mainly attributable to the decrease in the general level of interest rates in Korea in 2017 compared to 2016.
~~Net interest expense frominter-segment~~ transactions for this segment increased 4.0% from ￦472 billion in 2016 to ￦491 billion in 2017, principally as a result of increased funding needs for this segment in light of the increase in the average volumes of general purpose household loans (including home equity loans) and mortgage loans.
Impairment losses due to credit loss and others for this segment increased 12.6% from ￦87 billion in 2016 to ￦98 billion in 2017, primarily as a result of an increase in provisions for general purpose household loans (including home equity loans) and mortgage loans, mainly reflecting the increase in the outstanding balances of such loans.
~~Non-interest~~ ~~income attributable to this segment decreased 13.2% from ￦924 billion in 2016 to ￦802 billion in 2017, primarily due to a decrease in gains on transaction of foreign exchange.~~
~~Non-interest~~ ~~expense for this segment decreased 37.4% from ￦406 billion in 2016 to ￦254 billion in 2017, primarily as a result of a decrease in losses on transaction of foreign exchange.~~
~~Netnon-interest~~ ~~income frominter-segment~~ transactions for this segment increased 161.5% from ￦39 billion in 2016 to ￦102 billion in 2017, principally as a result of an increase in fee income from our asset management products, including mutual funds, money trust products and bancassurance products.
Administrative expenses attributable to this segment increased 1.2% from ￦1,788 billion in 2016 to ￦1,809 billion in 2017, primarily due to an increase in benefit levels for our employees in this segment.
~~Comparison of 2016 to 2015~~
Our net income before tax for this segment increased 274.3% from ￦35 billion in 2015 to ￦131 billion in 2016. Net income after tax also increased 280.8% from ￦26 billion in 2015 to ￦99 billion in 2016.
Interest income for this segment increased 4.5% from ￦2,851 billion in 2015 to ￦2,980 billion in 2016, primarily due to an increase in the average balance of mortgage loans, mainly reflecting increased demand for such loans, which was partially offset by a decrease in the average yield on such loans. The effect of such increase in the average balance of mortgage loans was also offset in part by a decrease in the average yield on general purpose household loans (including home equity loans), mainly reflecting the decrease in the general level of interest rates in Korea in 2016, which in turn was partially offset by an increase in the average balance of such loans.
Interest expense attributable to this segment decreased 16.6% from ￦1,228 billion in 2015 to ￦1,024 billion in 2016. The decrease in interest expense was primarily due to a decrease in the average cost of time and savings deposits held by consumers, which was mainly attributable to the decrease in the general level of interest rates in Korea in 2016.
~~Net interest expense frominter-segment~~ transactions for this segment increased 41.3% from ￦334 billion in 2015 to ￦472 billion in 2016, principally as a result of increased funding needs for this segment in light of the increase in the average volumes of mortgage loans and general purpose household loans (including home equity loans)(provisions).
~~Impairment losses due to credit loss and others for this segment increased more than10-fold~~ from ￦8 billion in 2015 to ￦87 billion in 2016, primarily as a result of a significant increase in provisions for customer reward credits due to the release of our new mobile financial service platform.
~~Non-interest~~ ~~income attributable to this segment increased 4.3% from ￦886 billion in 2015 to ￦924 billion in 2016, primarily due to an increase in gains on transaction of foreign exchange.~~
~~Non-interest~~ ~~expense for this segment increased 15.0% from ￦353 billion in 2015 to ￦406 billion in 2016, primarily as a result of an increase in losses on transaction of foreign exchange.~~
~~Netnon-interest~~ ~~income frominter-segment~~ ~~transactions for this segment increased 77.3% from ￦22 billion in 2015 to ￦39 billion in 2016, principally as a result of an increase in fee income from trust management services.~~
Administrative expenses attributable to this segment increased 0.3% from ￦1,782 billion in 2015 to ￦1,788 billion in 2016, primarily due to an increase in salaries attributable mainly to higher average wages paid to our employees in this segment, which more than offset a decrease in the number of employees in this segment caused by a branch reorganization.
~~Corporate Banking~~
~~This segment consists of our corporate banking (includingsmall-~~ ~~andmedium-sized~~ ~~enterprise banking and large corporate banking) operations. The following table shows, for the periods indicated, our income statement data for this segment:~~

   Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016
   (in billions of Won) (%)
Income statement data

Interest income
   ￦ 3,256 ￦ 3,026 ￦ 2,965 (7.1 )% (2.0 )%
Interest expense
   (1,880 ) (1,781 ) (1,682 ) (5.3 ) (5.6 )
Inter-segment
   324 496 512 53.1 3.2


Net interest income
   1,700 1,741 1,795 2.4 3.1
Non-interest income
   503 535 681 6.4 27.3
Non-interest expense
   (26 ) (33 ) (170 ) 26.9 415.2
Inter-segment
   37 48 60 29.7 25.0


Netnon-interest income
   514 550 571 7.0 3.8
Administrative expenses
   (926 ) (967 ) (832 ) 4.4 (14.0 )
Impairment losses due to credit loss and others⁽¹⁾
   (870 ) (509 ) (317 ) (41.5 ) (37.7 )


Total other expenses
   (1,796 ) (1,476 ) (1,149 ) (17.8 ) (22.2 )


Operating income
   418 815 1,217 95.0 49.3


Netnon-operating loss
   (2 ) (1 ) (3 ) (50.0 ) 200.0


Net income before tax
   416 814 1,214 95.7 49.1


Income tax expense
   (99 ) (204 ) (296 ) 106.1 45.1


Net income
   ￦ 317 ￦ 610 ￦ 918 92.4 % 50.5 %


⁽¹⁾ ~~Consist of impairment losses due to credit loss, gain (loss) on loan sales and provisions (reversal of provisions).~~
~~Comparison of 2017 to 2016~~
Our net income before tax for this segment increased 49.1% from ￦814 billion in 2016 to ￦1,214 billion in 2017. Net income after tax also increased 50.5% from ￦610 billion in 2016 to ￦918 billion in 2017.
Interest income for this segment decreased 2.0% from ￦3,026 billion in 2016 to ￦2,965 billion in 2017, primarily due to a decrease in the average balances of commercial and industrial and other commercial loans, mainly reflecting a decrease in loans to certain large corporate borrowers, principally as a result of our efforts to decrease our exposure to such borrowers and diversify our loan portfolio, which was partially offset by a slight increase in the average yields on such loans.
Interest expense attributable to this segment, which consists mainly of interest expense on corporate deposits, borrowings and debentures, decreased 5.6% from ￦1,781 billion in 2016 to ￦1,682 billion in 2017. The decrease in interest expense was primarily due to a decrease in the average cost of time and savings deposits held by corporate customers, mainly attributable to the decrease in the general level of interest rates in Korea in 2017 compared to 2016.
~~Net interest income frominter-segment~~ transactions for this segment increased 3.2% from ￦496 billion in 2016 to ￦512 billion in 2017, principally as a result of an increase in the average balance of loans to other segments, which mainly reflected increased funding needs of the consumer banking segment.
Impairment losses due to credit loss and others for this segment decreased 37.7% from ￦509 billion in 2016 to ￦317 billion in 2017, primarily as a result of a decrease in provisions for corporate loans, mainly reflecting an overall improvement in the asset quality of our corporate loan portfolio.
~~Non-interest~~ ~~income attributable to this segment increased 27.3% from ￦535 billion in 2016 to ￦681 billion in 2017, primarily due to an increase in gains on transaction of derivatives.~~
~~Non-interest~~ ~~expense for this segment increased more thanfive-fold~~ ~~from ￦33 billion in 2016 to ￦170 billion in 2017, primarily as a result of an increase in losses on transaction of derivatives.~~
Administrative expenses attributable to this segment decreased 14.0% from ￦967 billion in 2016 to ￦832 billion in 2017, primarily due to increased efficiency from the consolidation of corporate banking branches with consumer banking branches, which was reflected in this segment.
~~Comparison of 2016 to 2015~~
Our net income before tax for this segment increased 95.7% from ￦416 billion in 2015 to ￦814 billion in 2016. Net income after tax also increased 92.4% from ￦317 billion in 2015 to ￦610 billion in 2016.
Interest income for this segment decreased 7.1% from ￦3,256 billion in 2015 to ￦3,026 billion in 2016, primarily due to a decrease in average yields on commercial and industrial and other commercial loans, mainly reflecting the decrease in the general level of interest rates in Korea in 2016, the effect of which was partially offset by an increase in the average balance of commercial and industrial loans.
Interest expense attributable to this segment decreased 5.3% from ￦1,880 billion in 2015 to ￦1,781 billion in 2016. The decrease in interest expense was primarily due to a decrease in the average cost of time and savings deposits held by corporate customers, which was enhanced by a decrease in the average cost of corporate debentures, all of which were mainly attributable to the decrease in the general level of interest rates in Korea in 2016.
~~Net interest income frominter-segment~~ transactions for this segment increased 53.1% from ￦324 billion in 2015 to ￦496 billion in 2016, principally as a result of an increase in the average balance of loans to other segments, which mainly reflected increased funding needs of the consumer banking segment.
Impairment losses due to credit loss and others for this segment decreased 41.5% from ￦870 billion in 2015 to ￦509 billion in 2016, primarily as a result of a decrease in provisions for corporate loans, mainly reflecting an overall improvement in the asset quality of our corporate loan portfolio.
~~Non-interest~~ ~~income attributable to this segment increased 6.4% from ￦503 billion in 2015 to ￦535 billion in 2016, primarily due to an increase in gains on transaction of foreign exchange.~~
~~Non-interest~~ ~~expense for this segment increased 26.9 % from ￦26 billion in 2015 to ￦33 billion in 2016, primarily as a result of an increase in losses on transaction of foreign exchange.~~
Administrative expenses attributable to this segment increased 4.4% from ￦926 billion in 2015 to ￦967 billion in 2016, primarily due to an increase in salaries attributable mainly to growth in the number of employees in this segment.
~~Investment Banking~~
This segment consists of our investment banking operations, including principally project finance, structured finance, merger and acquisition financing and financial advisory services. The following table shows, for the periods indicated, our income statement data for this segment:

   Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016
   (in billions of Won) (%)
Income statement data

Interest income
   ￦ 155 ￦ 153 ￦ 148 (1.3 )% (3.3 )%
Interest expense
   — — — — —
Inter-segment
   (149 ) (138 ) (136 ) (7.4 ) (1.4 )


Net interest income
   6 15 12 150.0 (20.0 )
Non-interest income
   490 605 367 23.5 (39.3 )
Non-interest expense
   (375 ) (444 ) (215 ) 18.4 (51.6 )
Inter-segment
   — — — — —


Netnon-interest income
   115 161 152 40.0 (5.6 )
Administrative expenses
   (15 ) (15 ) (13 ) — (13.3 )
Impairment losses due to credit loss and others⁽¹⁾
   68 (96 ) (51 ) N/M ⁽²⁾ (46.9 )


Total other income (expenses)
   53 (111 ) (64 ) N/M ⁽²⁾ (42.3 )


Operating income (loss)
   174 65 100 (62.6 ) 53.8


Netnon-operating income
   44 46 39 4.5 (15.2 )


Net income (loss) before tax
   218 111 139 (49.1 ) 25.2


Income tax benefit (expense)
   (53 ) (27 ) (33 ) (49.1 ) 22.2


Net income (loss)
   ￦ 165 ￦ 84 ￦106 (49.1 )% 26.2 %


⁽¹⁾ ~~Consist of impairment losses due to credit loss, gain (loss) on loan sales and provisions (reversal of provisions).~~
⁽²⁾
Include depreciation and amortization of ￦128 billion in 2017, ￦178 billion in 2018 and ￦435 billion in 2019.
⁽³⁾
N/M = not meaningful.
~~Comparison of 2017 to 2016~~
Our net income before tax for this segment increased 25.2% from ￦111 billion in 2016 to ￦139 billion in 2017. Net income after tax also increased 26.2% from ￦84 billion in 2016 to ￦106 billion in 2017.
Interest income for this segment, which consists mainly of interest income from financing provided to corporations, decreased 3.3% from ￦153 billion in 2016 to ￦148 billion in 2017, primarily reflecting the decrease in the general level of interest rates in Korea in 2017 compared to 2016.
~~Net interest expense oninter-segment~~ transactions for this segment decreased 1.4% from ￦138 billion in 2016 to ￦136 billion in 2017, principally as a result of a decrease in the average cost of borrowings from other segments, which mainly reflected the lower interest rate environment in Korea.
Impairment losses due to credit loss and others for this segment decreased 46.9% from ￦96 billion in 2016 to ￦51 billion in 2017, primarily as a result of an improvement in the overall asset quality of our financing portfolio.
~~Non-interest~~ ~~income attributable to this segment decreased 39.3% from ￦605 billion in 2016 to ￦367 billion in 2017, primarily due to a decrease in gains on transaction of foreign exchange.~~
~~Non-interest~~ ~~expense for this segment decreased 51.6% from ￦444 billion in 2016 to ￦215 billion in 2017, primarily as a result of a decrease in losses on transaction of foreign exchange.~~
~~Administrative expenses attributable to this segment decreased 13.3% from ￦15 billion in 2016 to ￦13 billion in 2017, primarily due to increased efficiency in the use of our sales channels.~~
Comparison of ~~2016~~2019 to ~~2015~~2018
Our net income before tax for this segment decreased ~~49.1%~~5.7% from ~~￦218~~￦2,629 billion in ~~2015~~2018 to ~~￦111~~￦2,478 billion in ~~2016.~~2019. Net income after tax also decreased ~~49.1%~~2.8% from ~~￦165~~￦1,916 billion in ~~2015~~2018 to ~~￦84~~￦1,862 billion in ~~2016.~~2019.
~~Interest~~Net interest income for this segment ~~decreased 1.3%~~increased 2.9% from ~~￦155~~￦4,454 billion in ~~2015~~2018 to ~~￦153~~￦4,583 billion in ~~2016,~~2019, primarily due to an increase in the average balances of loans, principally as a result of increased demand for loans from customers, which was enhanced by an increase in the average yields on loans, mainly reflecting the ~~decrease~~overall increase in the general level of interest rates in Korea in ~~2016.~~2019 compared to 2018.
~~Net interest expense oninter-segment~~Non-interest ~~transactions for~~income attributable to this segment ~~decreased 7.4%~~increased 2.6% from ~~￦149~~￦1,517 billion in ~~2015~~2018 to ~~￦138~~￦1,557 billion in ~~2016, principally as a result of a decrease~~2019, primarily due to increases in ~~the average cost of borrowings from other segments,~~fees and commissions received on foreign exchange and electronic finance, which mainly ~~reflected~~reflect the ~~decrease in the general level~~expansion of ~~interest rates in Korea in 2016.~~our overseas operations and online and electronic business, respectively.
~~Impairment~~Reversal of (provision for) impairment losses due to credit loss and others for this segment changed from a net reversal of ~~￦68~~￦5 billion in ~~2015~~2018 to a net ~~loss~~provision of ~~￦96~~￦33 billion in ~~2016,~~2019, primarily as a result of ~~an increase~~a decrease in reversal of provisions ~~for credit losses with respect~~on guarantees attributable to ~~financing provided to a~~significant reversals in 2018 caused by the improvement in the financial condition of certain corporate ~~customer, as well as reversals~~customers on behalf of ~~provisions for credit losses in 2015~~which we had extended guarantees and loans, which were not repeated in ~~2016.~~2019.
General administrative expenses attributable to this segment increased 1.8% from ￦3,416 billion in 2018 to ￦3,479 billion in 2019, mainly due to an increase in depreciation and amortization expenses resulting from our adoption of IFRS 16 that was offset in part by a decrease in rent expenses. See Note2(1)-1)-a) of the notes to our consolidated financial statements included elsewhere in this annual report.
Non-operating income (expense) for this segment changed from net income of ￦70 billion in 2018 to net expense of ￦151 billion in 2019, primarily due to an increase in provisions relating to the estimated reimbursements and other payments in connection with Woori Bank’s sale of derivative-linked fund and securities products tied to yields on treasury bonds of Germany, the United Kingdom and the United States. See “Item 8.A. Consolidated Statements and Other Financial Information—Legal Proceedings and Regulatory Actions—Woori Bank” and Note23-(5)-2) of the notes to our consolidated financial statements included elsewhere in this annual report.
Comparison of 2018 to 2017
Our net income before tax for this segment increased 51.7% from ￦1,733 billion in 2017 to ￦2,629 billion in 2018. Net income after tax also increased 41.5% from ￦1,354 billion in 2017 to ￦1,916 billion in 2018.
Net interest income for this segment increased 9.1% from ￦4,083 billion in 2017 to ￦4,454 billion in 2018, primarily due to an increase in the average balance of loans, principally as a result of increased demand for loans from customers, which was enhanced by an increase in the average yields on loans, mainly reflecting the increase in the general level of interest rates in Korea in 2018 compared to 2017.
Non-interest income attributable to this segment ~~increased 23.5% from ￦490~~remained relatively stable at ￦1,517 billion in ~~2015~~2018 compared to ~~￦605 billion in 2016, primarily due to an increase in gains on transaction of foreign exchange.~~
~~Non-interest~~ ~~expense for this segment increased 18.4% from ￦375 billion in 2015 to ￦444 billion in 2016, primarily as a result of an increase in losses on transaction of foreign exchange.~~
~~Administrative expenses attributable to this segment remained stable at ￦15 billion in 2015 and 2016.~~
~~Capital Markets~~
~~This segment consists of our core capital markets operations, including principally securities investment and trading of securities (other thanavailable-for-sale~~ ~~securities), foreign exchange and derivatives. The following table shows, for the periods indicated, our income statement data for this segment:~~

   Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016
   (in billions of Won) (%)
Income statement data

Interest income
   ￦ 19 ￦ 19 ￦ 19 — % — %
Interest expense
   — — — — —
Inter-segment
   22 30 18 36.4 (40.0 )


Net interest income
   41 49 37 19.5 (24.5 )
Non-interest income
   5,761 7,590 9,548 31.7 25.8
Non-interest expense
   (5,743 ) (7,586 ) (9,478 ) 32.1 24.9
Inter-segment
   — — — — —


Netnon-interest expense
   18 4 70 (77.8 ) (1650.0 )
Administrative expenses
   (17 ) (18 ) (16 ) 5.9 (11.1 )
Impairment losses due to credit loss and others⁽¹⁾
   (27 ) (34 ) 31 25.9 (191.2 )


Total other expenses
   (44 ) (52 ) 15 18.2 (128.8 )


Operating income (loss)
   15 1 122 (93.3 ) N/M ⁽²⁾


Netnon-operating income (loss)
   — (5 ) — N/M ⁽²⁾ N/M ⁽²⁾


Net income (loss) before tax
   15 (4 ) 122 N/M ⁽²⁾ N/M ⁽²⁾


Income tax expense
   (4 ) 1 (30 ) N/M ⁽²⁾ N/M ⁽²⁾


Net income (loss)
   ￦ 11 ￦ (3 ) ￦ 92 N/M ⁽²⁾ N/M ⁽²⁾


⁽¹⁾ ~~Consist of impairment losses due to credit loss, gain (loss) on loan sales and provisions (reversal of provisions).~~
⁽²⁾ ~~N/M = not meaningful.~~
~~Comparison of 2017 to 2016~~
Our net income (loss) before tax for this segment changed from a net loss of ￦4 billion in 2016 to a net gain of ￦122 billion in 2017. Net income (loss) after tax also changed from a net loss of ￦3 billion in 2016 to a net gain of ￦92￦1,518 billion in 2017.
~~Interest income for this segment, which consists mainly~~Reversal of ~~interest income fromheld-for-trading~~ ~~securities, remained stable at ￦19 billion in 2016 and 2017.~~
~~Net interest income oninter-segment~~ ~~transactions for this segment decreased 40.0% from ￦30 billion in 2016 to ￦18 billion in 2017, principally as a result of a decrease in the average balance of loans to other segments.~~
~~Impairment~~(provision for) impairment losses due to credit loss and others for this segment changed from a net ~~loss~~provision of ~~￦34~~￦366 billion in ~~2016~~2017 to a net ~~gain~~reversal of ~~￦31~~￦5 billion in ~~2017,~~2018, primarily as a result of ~~a credit valuation adjustment relating to derivatives, which mainly reflected a decrease~~improvements in the ~~volume~~overall asset quality of ~~such derivatives due to lower exchange rate volatility in 2017.~~our corporate loan portfolio and the credit ratings of certain corporate borrowers.
~~Non-interest~~ ~~income~~General administrative expenses attributable to this segment increased ~~25.8%~~2.6% from ~~￦7,590 billion in 2016 to ￦9,548~~￦3,330 billion in 2017 ~~primarily~~to ￦3,416 billion in 2018, mainly due to an increase in ~~gains on transaction of foreign exchange.~~
~~Non-interest~~ ~~expense for this segment increased 24.9% from ￦7,586 billion in 2016 to ￦9,478 billion in 2017, primarily as a result of an increase in losses on transaction of foreign exchange.~~
~~Administrative expenses attributable to this segment decreased 11.1% from ￦18 billion in 2016 to ￦16 billion in 2017, primarily due to decreases in~~ salaries and benefits paid ~~attributable mainly~~ to ~~a reduction in the number of~~our employees in this ~~segment.~~segment as well as an increase in computer andIT-related expenses and depreciation and amortization relating to the upgrade of our computer systems during 2018, as discussed above.
~~Comparison of 2016 to 2015~~
~~Our net~~Non-operating income ~~(loss) before tax~~(expense) for this segment changed from net ~~income~~expense of ~~￦15~~￦172 billion in ~~2015~~2017 to ~~a net loss of ￦4 billion in 2016. Net income (loss) after tax also changed from~~ net income of ~~￦11~~￦70 billion in ~~2015 to a net loss of ￦3 billion in 2016.~~
~~Interest income for this segment remained stable at ￦19 billion in 2015 and 2016.~~
~~Net interest income oninter-segment~~ transactions for this segment increased 36.4% from ￦22 billion in 2015 to ￦30 billion in 2016, principally as a result of a decrease in the average cost of borrowings from other segments, which mainly reflected the decrease in the general level of interest rates in Korea in 2016.
Impairment losses due to credit loss and others for this segment increased 25.9% from ￦27 billion in 2015 to ￦34 billion in 2016, primarily as a result of a credit valuation adjustment relating to derivatives, which mainly reflected an increase in the volume of such derivatives due to higher exchange rate volatility in 2016.
~~Non-interest~~ ~~income attributable to this segment increased 31.7% from ￦5,761 billion in 2015 to ￦7,590 billion in 2016,~~2018, primarily due to ~~an increase~~impairment losses relating to certain equity method securities recognized in ~~gains on transaction of foreign exchange.~~2017, which were not repeated in 2018.
~~Non-interest~~ ~~expense for this segment increased 32.1% from ￦5,743 billion in 2015 to ￦7,586 billion in 2016, primarily as a result of an increase in losses on transaction of foreign exchange.~~
Administrative expenses attributable to this segment increased 5.9% from ￦17 billion in 2015 to ￦18 billion in 2016, primarily due to an increase in salaries paid to our employees in this segment.
Credit Card
This segment consists of ~~our~~the credit card ~~operations.~~operations of Woori Card. Woori Card offers credit card products and services mainly to consumers and corporate customers in Korea. The following table shows, for the ~~periods~~years indicated, our income statement data for this segment:

   Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016
   (in billions of Won) (%)
Income statement data

Interest income
   ￦ 500 ￦ 557 ￦ 600 11.4 % 7.7 %
Interest expense
   (122 ) (129 ) (136 ) 5.7 5.4
Inter-segment
   — — — — —


Net interest income
   378 428 464 13.2 8.4
Non-interest income
   871 986 1,164 13.2 18.1
Non-interest expense
   (773 ) (906 ) (1,090 ) 17.2 20.3
Inter-segment
   — — — — —


Netnon-interest expense
   98 80 74 (18.4 ) (7.5 )
Administrative expenses
   (124 ) (148 ) (165 ) 19.4 11.5
Impairment losses due to credit loss and others⁽¹⁾
   (197 ) (216 ) (235 ) 9.6 8.8


Total other expenses
   (321 ) (364 ) (400 ) 13.4 9.9


Operating income
   155 144 138 (7.1 ) (4.2 )


Netnon-operating loss
   (5 ) (2 ) (5 ) (60.0 ) 150.0


Net income before tax
   150 142 133 (5.3 ) (6.3 )


Income tax expense
   (33 ) (33 ) (32 ) — (3.0 )


Net income
   ￦ 117 ￦ 109 ￦ 101 (6.8 )% (7.3 )%


   Year ended December 31, Percentage change
   2017 2018 2019 2018/2017 2019/2018
   (in billions of Won) (%)
Income statement data

Net interest income
   ￦ 498 ￦ 510 ￦ 554 2.4 % 8.6 %
Non-interest income
   40 60 32 50.0 (46.7 )
Impairment losses due to credit loss and others⁽¹⁾
   (235 ) (227 ) (260 ) (3.4 ) 14.5
General administrative expenses⁽²⁾
   (164 ) (171 ) (190 ) 4.3 11.1


Net operating income
   138 172 136 24.6 (20.9 )
Non-operating income (expense)
   (5 ) (6 ) 14 20.0 N/M ⁽³⁾


Net income before tax
   133 167 150 25.6 (10.2 )
Tax expense
   (32 ) (40 ) (36 ) 25.0 (10.0 )


Net income
   ￦ 101 ￦ 127 ￦ 114 25.7 (10.2 )


⁽¹⁾
Consist of reversal of (provision for) impairment losses due to credit loss and others, gain (loss) on loan sales and reversal of provisions ~~(reversal~~(provisions).
⁽²⁾
Include depreciation and amortization of ~~provisions).~~￦10 billion in 2017, ￦11 billion in 2018 and ￦28 billion in 2019.
⁽³⁾
N/M = not meaningful.
Comparison of ~~2017~~2019 to ~~2016~~2018
Our net income before tax for this segment decreased ~~6.3%~~10.2% from ~~￦142~~￦167 billion in ~~2016~~2018 to ~~￦133~~￦150 billion in ~~2017.~~2019. Net income after tax also decreased ~~7.3%~~10.2% from ~~￦109~~￦127 billion in ~~2016~~2018 to ~~￦101~~￦114 billion in ~~2017.~~2019.
~~Interest~~Net interest income for this segment increased ~~7.7%~~8.6% from ~~￦557~~￦510 billion in ~~2016~~2018 to ~~￦600~~￦554 billion in 2019, primarily due to an increase in the average yield on credit card receivables, including cash advances and credit card loans, which was offset in part by a decrease in the average volume of such receivables.
Non-interest income attributable to this segment decreased 46.7% from ￦60 billion in 2018 to ￦32 billion in 2019, mainly due to a decrease in fees and commissions received on credit cards resulting from a decrease in rates on credit card commissions received from merchants in accordance with Government policy.
Impairment losses due to credit loss and others for this segment increased 14.5% from ￦227 billion in 2018 to ￦260 billion in 2019, primarily as a result of an increase in the outstanding balance of our credit card receivables.
General administrative expenses attributable to this segment increased 11.1% from ￦171 billion in 2018 to ￦190 billion in 2018, mainly due to increases in salaries and benefits paid to our employees in this segment and computer andIT-related expenses.
Non-operating income (expense) for this segment changed from net expense of ￦6 billion in 2018 to net income of ￦14 billion in 2019, mainly as a result of a net reversal of provisions related to litigation in this segment due to judgments in our favor in 2019.
Comparison of 2018 to 2017
Our net income before tax for this segment increased 25.6% from ￦133 billion in 2017 to ￦167 billion in 2018. Net income after tax also increased 25.7% from ￦101 billion in 2017 to ￦127 billion in 2018.
Net interest income for this segment increased 2.4% from ￦498 billion in 2017 to ￦510 billion in 2018, primarily due to an increase in the average balance of credit card receivables, mainly reflecting an increase in the volume of credit card transactions, ~~as well as an increase in~~including cash advances and credit card ~~issuances,~~loans, which was offset in part by a decrease in the average yield on such receivables.
~~Interest expense~~Non-interest income attributable to this segment increased ~~5.4%~~50.0% from ~~￦129 billion in 2016 to ￦136~~￦40 billion in 2017 ~~primarily~~to ￦60 billion in 2018, mainly due to ~~increased funding needs for this segment in light of the~~an increase in ~~the average balance of credit card receivables.~~fees and commissions income in this segment.
Impairment losses due to credit loss and others for this segment ~~increased 8.8%~~decreased 3.4% from ~~￦216 billion in 2016 to~~ ￦235 billion in 2017 to ￦227 billion in 2018, primarily as a result of ~~an increase~~gains relating to sales of loans that were recognized in ~~provisions for credit losses, mainly due to an increase in the outstanding balance of our credit card receivables.~~this category.
~~Non-interest~~ income attributable to this segment increased 18.1% from ￦986 billion in 2016 to ￦1,164 billion in 2017, primarily due to an increase in credit card fees, mainly reflecting the increase in the average balance of credit card receivables.
~~Non-interest~~ expense for this segment increased 20.3% from ￦906 billion in 2016 to ￦1,090 billion in 2017, primarily as a result of an increase in credit card commissions, mainly reflecting the increase in the average balance of credit card receivables.
~~Administrative~~General administrative expenses attributable to this segment increased ~~11.5%~~4.3% from ~~￦148 billion in 2016 to ￦165~~￦164 billion in 2017 ~~primarily due~~ to ~~an increase in salaries paid to our employees in this segment.~~
~~Comparison of 2016 to 2015~~
~~Our net income before tax for this segment decreased 5.3% from ￦150~~￦171 billion in ~~2015 to ￦142 billion in 2016. Net income after tax also decreased 6.8% from ￦117 billion in 2015 to ￦109 billion in 2016.~~
~~Interest income for this segment increased 11.4% from ￦500 billion in 2015 to ￦557 billion in 2016,~~2018, which was primarily ~~due to an increase in the average balance of credit card receivables, mainly reflecting an increase in the volume of credit card transactions as well as an increase in credit card issuances.~~
~~Interest expense~~ attributable to this segment increased 5.7% from ￦122 billion in 2015 to ￦129 billion in 2016, primarily due to increased funding needs for this segment in light of the increase in the average balance of credit card receivables.
Impairment losses due to credit loss and others for this segment increased 9.6% from ￦197 billion in 2015 to ￦216 billion in 2016, primarily as a result of an increase in provisions for credit losses, mainly due to an increase in the outstanding balance of our credit card receivables.
~~Non-interest~~ income attributable to this segment increased 13.2% from ￦871 billion in 2015 to ￦986 billion in 2016, primarily due to an increase in credit card fees, mainly reflecting the increase in the average balance of credit card receivables.
~~Non-interest~~ expense for this segment increased 17.2% from ￦773 billion in 2015 to ￦906 billion in 2016, primarily as a result of an increase in credit card commissions, mainly reflecting the increase in the average balance of credit card receivables.
~~Administrative expenses attributable to this segment increased 19.4% from ￦124 billion in 2015 to ￦148 billion in 2016, primarily due~~ to an increase in salaries paid to our employees in this segment, principally reflecting an increase in the number of such employees, as well as ~~an increase~~increases in advertising ~~expenses.~~
expenses relating to new products and depreciation expenses relating to IT facilities.
Non-operating expense for this segment remained relatively stable at ￦6 billion in 2018 compared to ￦5 billion in 2017.
~~Other Operations~~Investment Banking
~~Other operations include all~~This segment consists of ~~our operations not included in~~ the ~~other segments, including principally the~~investment banking operations of ~~our Credit Management~~Woori Investment Bank. Woori Investment Bank mainly provides project finance, structured finance, merger and ~~Collection Department~~acquisition financing and ~~our Corporate Restoration Department, our treasury operations involving transactions ofavailable-for-sale~~ ~~securities and financing among~~ financial ~~institutions as well as the operations of all of our subsidiaries other than Woori Card.~~advisory services. The following table shows, for the ~~periods~~years indicated, our income statement data for this segment:

   Year ended December 31, Percentage change
   2015 2016 2017 2016/2015 2017/2016
   (in billions of Won) (%)
Income statement data

Interest income
   ￦ 1,586 ￦ 1,492 ￦ 1,361 (5.9 )% (8.8 )%
Interest expense
   (980 ) (864 ) (835 ) (11.8 ) (3.4 )
Inter-segment
   137 85 97 (38.0 ) 14.1


Net interest income
   743 713 623 (4.0 ) (12.6 )
Non-interest income
   3,246 4,563 2,683 40.6 (41.2 )
Non-interest expense
   (2,908 ) (4,173 ) (2,132 ) 43.5 (48.9 )
Inter-segment
   (58 ) (87 ) (162 ) 50.0 86.2


Netnon-interest income
   280 303 389 8.2 28.4
Administrative expenses
   (555 ) (794 ) (954 ) 43.1 20.2
Impairment losses due to credit loss and others⁽¹⁾
   83 219 15 163.9 (93.2 )


Total other expenses
   (472 ) (575 ) (939 ) 21.8 63.3


Operating income
   551 441 73 (20.0 ) (83.4 )


Netnon-operating income (loss)
   138 56 (113 ) (59.4 ) N/M ⁽²⁾


Net income (loss) before tax
   689 497 (40 ) (27.9 ) N/M ⁽²⁾


Income tax benefit (expense)
   (137 ) 17 63 N/M ⁽²⁾ 270.6


Net income
   ￦ 552 ￦ 514 ￦ 23 (6.9 )% (95.7 )%


   Year ended December 31, Percentage change
   2017 2018 2019 2018/2017 2019/2018
   (in billions of Won) (%)
Income statement data

Net interest income
   ￦ 31 ￦ 43 ￦ 54 38.7 25.6 %
Non-interest income
   6 20 34 233.3 70.0
Reversal of (provision for) impairment losses due to credit loss and others⁽¹⁾
   3 (4 ) (1 ) N/M ⁽³⁾ (75.0 )
General administrative expenses⁽²⁾
   (18 ) (26 ) (31 ) 44.4 19.2


Net operating income
   22 33 56 50.0 69.7
Non-operating expense
   — — (4 ) — N/A ⁽⁴⁾


Net income before tax
   21 33 52 57.1 57.6
Tax income (expense)
   (1 ) 1 1 N/M 0.0


Net income
   ￦ 20 ￦ 33 ￦ 53 65.0 % 60.6


⁽¹⁾
Consist of reversal of (provision for) impairment losses due to credit loss and others, gain (loss) on loan sales and reversal of provisions ~~(reversal of provisions)~~(provisions).
⁽²⁾
Include depreciation and amortization of ￦1 billion in 2017, ￦1 billion in 2018 and ￦2 billion in 2019.
⁽³⁾
N/M = not meaningful.
⁽⁴⁾
N/A = not applicable.
Comparison of ~~2017~~2019 to ~~2016~~2018
Our net income ~~(loss)~~ before tax for this segment ~~changed~~increased 57.6% from ~~net income of ￦497~~￦33 billion in ~~2016~~2018 to ~~a net loss of ￦40~~￦52 billion in ~~2017.~~2019. Net income after tax ~~decreased 95.7%~~also increased 60.6% from ~~￦514~~￦33 billion in ~~2016~~2018 to ~~￦22~~￦53 billion in ~~2017.~~2019.
~~Interest~~
Net interest income for this segment, which consists mainly ~~includes~~of interest income ~~due~~ from ~~banks and on certain other loans and financial assets, decreased 8.8%~~financing provided to corporations, increased 25.6% from ~~￦1,492~~￦43 billion in ~~2016~~2018 to ~~￦1,361~~￦54 billion in ~~2017,~~2019, primarily ~~due to the decrease~~reflecting an increase in the ~~general level~~average balance of ~~interest rates in Korea in 2017 compared~~such financing provided to ~~2016.~~corporate customers.
~~Interest expense~~Non-interest income attributable to this segment ~~which mainly includes interest expense on debentures, borrowings, call money and deposits due to customers, decreased 3.4%~~increased 70.0% from ~~￦864~~￦20 billion in ~~2016~~2018 to ~~￦835~~￦34 billion in ~~2017,~~2019, primarily due to ~~decreased funding costs for this segment~~an increase in ~~light of~~ the ~~lower interest rate environment in Korea in 2017.~~
~~Net interest income frominter-segment~~ ~~transactions for this segment increased 14.1% from ￦85 billion in 2016~~fees received on financing provided to ~~￦97 billion in 2017, principally~~corporations as a result of an increase in the average balance of ~~loans to other segments.~~such financing.
Impairment losses due to credit loss and others for this segment decreased 75.0% from ~~a net gain of ￦219~~￦4 billion in ~~2016~~2018 to ~~a net gain of ￦15~~￦1 billion in ~~2017, representing~~2019, primarily as a ~~decrease~~result of our recovery of loans previously written off in ~~net gain~~this segment, as well as our efforts to improve the overall asset quality of ~~93.2%, primarily~~our loan portfolio.
General administrative expenses attributable to this segment increased 19.2% from ￦26 billion in 2018 to ￦31 billion in 2019, mainly due to an increase in salary expenses as a result of an increase in ~~provisions for credit losses~~the number of our ~~Corporate Restoration Department, mainly reflecting the deterioration of the financial condition of certain companies, which securities were held by such department.~~
~~Non-interest~~ income attributable to this segment, which mainly includes gains on transaction of foreign exchange, gains on fair value hedged items and gains on transactions of derivatives, decreased 41.2% from ￦4,563 billion in 2016 to ￦2,683 billion in 2017, primarily due a decrease in gains on transactions of foreign exchange, mainly reflecting lower exchange rate volatility in 2017.
~~Non-interest~~ expense for this segment, which mainly includes losses on transaction of foreign exchange, losses on fair value hedged items and losses on transactions of derivatives, decreased 48.9% from ￦4,173 billion in 2016 to ￦2,132 billion in 2017, primarily as a result of a decrease in losses on transactions of foreign exchange, mainly reflecting lower exchange rate volatility in 2017.
~~Administrative expenses attributable to this segment increased 20.2% from ￦794 billion in 2016 to ￦954 billion in 2017, primarily due to an increase in redundancy payments, which are recorded~~employees in this ~~segment, resulting mainly from our implementation of an early retirement program in September 2017.~~segment.
Comparison of ~~2016~~2018 to ~~2015~~2017
Our net income before tax for this segment ~~decreased 27.9%~~increased 57.1% from ~~￦689~~￦21 billion in ~~2015~~2017 to ~~￦497~~￦33 billion in ~~2016.~~2018. Net income after tax also ~~decreased 6.9%~~increased 65.0% from ~~￦552~~￦20 billion in ~~2015~~2017 to ~~￦514~~￦33 billion in ~~2016.~~2018.
~~Interest~~Net interest income for this segment ~~decreased 5.9%~~increased 38.7% from ~~￦1,586~~￦31 billion in ~~2015~~2017 to ~~￦1,492~~￦43 billion in ~~2016,~~2018, primarily ~~due to the decrease~~reflecting an increase in the ~~general level~~average balance of ~~interest rates in Korea in 2016.~~such financing provided to corporate customers.
~~Interest expense~~Non-interest income attributable to this segment ~~decreased 11.8%~~increased 233.3% from ~~￦980~~￦6 billion in ~~2015~~2017 to ~~￦864~~￦20 billion in ~~2016,~~2018, primarily due to ~~decreased funding costs~~increases in gains relating to investment securities and advisory service fees.
Reversal of (provision for) impairment losses due to credit loss and others for this segment changed from a net reversal of ￦3 billion in ~~light~~2017 to a net provision of ￦4 billion in 2018, primarily as a result of an increase in the ~~lower interest rate environment~~average balance of our loan portfolio in ~~Korea~~this segment and the application of IFRS 9 in ~~2016.~~2018.
General administrative expenses attributable to this segment increased 44.4% from ￦18 billion in 2017 to ￦26 billion in 2018, mainly as a result of an increase in salary expenses as a result of an increase in the number of our employees in this segment.
Others
Other operations include the operations of Woori Financial Group and all of our subsidiaries (other than Woori Bank, Woori Card and Woori Investment Bank), including Woori FIS, Woori Finance Research, Woori Credit Information, Woori Fund Service, Woori Asset Management, Woori Private Equity Asset Management and Woori Global Asset Management.The following table shows, for the years indicated, our income statement data for this segment:
   Year ended December 31, Percentage change
   2017 2018 2019 2018/2017 2019/2018
   (in billions of Won) (%)
Income statement data

Net interest income
   ￦ — ￦ 1 ￦ 2 N/A ⁽³⁾ 100.0 %
Non-interest income
   283 297 958 4.9 222.6
Impairment losses due to credit loss and others⁽¹⁾
   — — (1 ) — N/A
General administrative expenses⁽²⁾
   (277 ) (293 ) (324 ) 5.8 10.6


Net operating income
   6 5 636 (16.7 ) N/M ⁽⁴⁾
Non-operating expense
   (5 ) — (2 ) N/A N/A


Net income before tax
   1 6 635 500.0 N/M
Tax expense
   (1 ) (2 ) (1 ) 100.0 (50.0 )


Net income
   ￦ — ￦ 3 ￦ 633 N/A N/M


⁽¹⁾
Consist of reversal of (provision for) impairment losses due to credit loss and others, gain (loss) on loan sales and reversal of provisions (provisions).
⁽²⁾
Include depreciation and amortization of ￦0.5 billion in 2017, ￦26 million in 2018 and ￦16 million in 2019.
⁽³⁾
N/A = not applicable.
⁽⁴⁾
N/M = not meaningful.
Comparison of 2019 to 2018
Our net income before tax for this segment increased from ￦6 billion in 2018 to ￦635 billion in 2019. Net income after tax increased from ￦3 billion in 2018 to ￦633 billion in 2019.
Net interest income ~~frominter-segment~~ ~~transactions~~ for this segment ~~decreased 38.0%~~increased 100.0% from ~~￦137~~￦1 billion in ~~2015~~2018 to ~~￦85~~￦2 billion in ~~2016, principally~~2019, primarily due to an increase in interest income from Woori FIS, Woori Asset Management and Woori Global Asset Management, some of which were newly acquired in 2019.
Non-interest income attributable to this segment increased 222.6% from ￦297 billion in 2018 to ￦958 billion in 2019, primarily as a result of ~~a decrease~~dividends from Woori Bank in ~~the average yield on loans to other segments, which mainly reflected the decrease in the general level of interest rates in Korea in 2016.~~2019.
Impairment losses due to credit loss and others for this segment increased from ~~a net gain of ￦83~~nil in 2018 to ￦1 billion in ~~2015~~2019, primarily as a result of provisions established in connection with deposits of the holding company.
General administrative expenses attributable to ~~a net gain of ￦219~~this segment increased 10.6% from ￦293 billion in ~~2016, representing~~2018 to ￦324 billion in 2019, mainly due to an increase in employee benefit expenses as a result of our establishment as a holding company.
Comparison of 2018 to 2017
Our net ~~gain of 163.9%,~~income before tax for this segment increased 500.0% from ￦1 billion in 2017 to ￦6 billion in 2018. Net income after tax increased from nil in 2017 to ￦3 billion in 2018.
Net interest income for this segment increased from nil in 2017 to ￦1 billion in 2018, primarily as a result of an ~~overall improvement~~increase in interest income from the deposits of the holding company, which was mainly attributable to the increase in the ~~asset quality~~general level of ~~loans~~interest rates in ~~this segment, mainly reflecting our efforts~~Korea in 2018 compared to ~~increase the proportion of loans with higher asset quality and to strengthen credit review and monitoring procedures.~~2017.
Non-interest income attributable to this segment increased ~~40.6%~~4.9% from ~~￦3,246~~￦283 billion in ~~2015~~2017 to ~~￦4,563~~￦297 billion in ~~2016,~~2018, primarily due to an increase in ~~gains on transactions of foreign exchange, mainly reflecting higher exchange rate volatility in 2016.~~fees and commissions income generated by Woori FIS.
~~Non-interest~~ ~~expense~~Impairment losses due to credit loss and others for this segment ~~increased 43.5% from ￦2,908 billion~~remained constant at nil in ~~2015 to ￦4,173 billion in 2016, primarily as a result of an increase in losses on transactions of foreign exchange, mainly reflecting higher exchange rate volatility in 2016.~~2017 and 2018.
~~Administrative~~General administrative expenses attributable to this segment increased ~~43.1%~~5.8% from ~~￦555~~￦277 billion in ~~2015~~2017 to ~~￦794~~￦293 billion in ~~2016, primarily~~2018, mainly due to an increase in ~~redundancy payments, resulting mainly from~~computer andIT-related expenses relating to an upgrade of our ~~implementation of~~computer systems, which was completed in May 2018 as well as an ~~early retirement program~~increase in ~~April and December 2016.~~employee benefit expenses.
Item 5.B.
Liquidity and Capital Resources
Financial Condition
Assets
The following table sets forth, as of the dates indicated, the principal components of our assets:

As of December 31, Percentage change As of December 31, Percentage change
2015 2016 2017 2016/2015 2017/2016 2017 2018 2019 2018/2017 2019/2018
(in billions of Won) (%) (in billions of Won) (%)
Cash and cash equivalents
￦ 6,644 ￦ 7,591 ￦ 6,908 14.3 % (9.0 )% ￦ 6,908 ￦ 6,748 ￦ 6,393 (2.3 )% (5.3 )%
Financial assets at fair value through profit or loss
5,133 5,651 5,843 10.1 3.4
Financial assets at fair value through profit or loss (IFRS 9)
— 6,126 8,069 N/A ⁽¹⁾ 31.7
Financial assets at fair value through profit or loss (IAS 39)
5,843 — — N/A N/A
Financial assets at fair value through other comprehensive income
— 18,063 27,731 N/A 53.5
Available-for-sale financial assets
17,171 20,818 15,353 21.2 (26.3 ) 15,353 — — N/A N/A
Securities at amortized cost
— 22,933 20,321 N/A (11.4 )
Held-to-maturity financial assets
13,622 13,910 16,749 2.1 20.4 16,749 — — N/A N/A
Loans and other financial assets at amortized cost:
— 282,458 293,718 N/A 4.0
Loans and receivables:
267,106 — — N/A N/A
Due from banks
11,181 14,821 8,871 32.6 (40.1 )
Due from banks⁽²⁾
8,868 14,151 14,492 59.6 2.4
Loans⁽²⁾
251,523 260,820 271,032 3.7 3.9
Loans in local currency
185,155 191,309 200,213 3.3 4.7 200,213 210,701 221,484 5.2 5.1
Loans in foreign currencies
13,105 14,102 13,148 7.6 (6.8 ) 13,148 15,239 18,534 15.9 21.6
Domestic banker’s letter of credit
4,805 3,754 2,517 (21.9 ) (33.0 )
Domestic banker’s usance
2,517 2,934 2,900 16.6 (1.2 )
Credit card accounts
6,099 6,674 6,827 9.4 2.3 6,827 8,051 8,399 17.9 4.3
Bills bought in foreign currencies
6,648 7,759 8,197 16.7 5.6 8,197 7,874 4,772 (3.9 ) (39.4 )
Bills bought in local currency
135 414 335 206.7 (19.1 ) 335 23 61 (93.1 ) 165.2
Factoring receivables
150 97 138 (35.3 ) 42.3 138 46 21 (66.7 ) (54.3 )
Advances for customers on guarantees
44 25 24 (43.2 ) (4.0 ) 24 14 13 (41.7 ) (7.1 )
Privately placed bonds
331 328 362 (0.9 ) 10.4 362 366 307 1.1 (16.1 )
Securitized loans
310 253 563 (18.4 ) 122.5 563 1,377 2,250 144.6 63.4
Call loans
2,758 2,985 3,003 8.2 0.6 3,003 2,669 3,290 (11.1 ) 23.3
Bonds purchased under resale agreements
7,584 8,855 16,859 16.8 90.4 16,859 11,702 8,982 (30.6 ) (23.2 )
Other loans
46 251 511 445.7 103.6
Loan origination costs and fees
435 459 607 5.5 32.2 511 574 621 12.3 8.2
Present value discount
(5 ) (14 ) (11 ) 180.0 (21.4 )
Other receivables
8,539 8,348 6,772 (2.2 ) (18.9 )
Allowance for credit losses
(2,478 ) (2,027 ) (1,830 ) (18.2 ) (9.7 )

Total loans and receivables, net
244,842 258,393 267,106 5.5 3.4
Premises and equipment, net
2,471 2,458 2,478 (0.5 ) 0.8
Other assets⁽¹⁾
1,976 1,862 1,858 (5.8 ) (0.2 )
Others
607 1,037 980 70.8 (5.5 )
Discounted present value
(11 ) (10 ) (7 ) (9.1 ) (30.0 )
Loss allowance
(1,770 ) (1,778 ) (1,575 ) 0.5 (11.4 )
Other financial assets (other receivables)⁽²⁾
6,715 7,487 8,193 11.5 9.4
Investments in joint ventures and associates
417 362 806 (13.2 ) 122.7
Investment properties
371 378 280 1.9 (25.9 )
Premises and equipment
2,478 2,450 3,365 (1.1 ) 37.3
Other assets⁽³⁾
1,070 929 1,299 (13.2 ) 39.8

Total assets
￦ 291,859 ￦ 310,683 ￦ 316,295 6.4 % 1.8 % ￦ 316,295 ￦ 340,447 ￦ 361,981 7.6 6.3

⁽¹⁾
N/A = not applicable.
⁽²⁾
Net of allowance for credit losses.
⁽³⁾
Includes ~~investments in joint ventures and associates, investment properties,~~ intangible assets and goodwill, assets held for distribution (sale), net defined benefit assets, current tax assets, deferred tax assets, derivative assets ~~assets held for sale, net defined benefit assets~~ and other assets.
For further information on our assets, see “Item 4.B. Business Overview—Assets and Liabilities.”
Comparison of ~~2017~~2019 to ~~2016~~2018
Our total assets increased ~~1.8%~~6.3% from ~~￦310,683~~￦340,447 billion as of December 31, ~~2016~~2018 to ￦361,981 billion as of December 31, 2019, principally due to a 3.9% increase in loans from ￦260,820 billion as of December 31, 2018 to ￦271,032 billion as of December 31, 2019, which was enhanced by a 53.5% increase in financial assets at fair
value through other comprehensive income from ￦18,063 billion as of December 31, 2018 to ￦27,731 billion as of December 31, 2019.
The increase in loans was primarily attributable to a 5.1% increase in loans in local currency from ￦210,701 billion as of December 31, 2018 to ￦221,484 billion as of December 31, 2019, which was enhanced by a 21.6% increase in loans in foreign currencies from ￦15,239 billion as of December 31, 2018 to ￦18,534 billion as of December 31, 2019. Such increases were partially offset by a 39.4% decrease in bills bought in foreign currencies from ￦7,874 billion as of December 31, 2018 to ￦4,772 billion as of December 31, 2019 and a 23.2% decrease in bonds purchased under resale agreements from ￦11,702 billion as of December 31, 2018 to ￦8,982 billion as of December 31, 2019. The increase in financial assets at fair value through other comprehensive income was primarily attributable to a 57.9% increase in debt securities of financial institutions from ￦11,253 billion as of December 31, 2018 to ￦17,770 billion as of December 31, 2019, which was enhanced by a 114.7% increase in corporate debt securities from ￦1,824 billion as of December 31, 2018 to ￦3,917 billion as of December 31, 2019.
Comparison of 2018 to 2017
Our total assets increased 7.6% from ￦316,295 billion as of December 31, 2017 ~~primarily as a result of a 3.4% increase in loans and receivables from ￦258,393~~to ￦340,447 billion as of December 31, ~~2016~~2018, principally due to ~~￦267,106~~a 3.7% increase in loans from ￦251,523 billion as of December 31, ~~2017. This~~2017 to ￦260,820 billion as of December 31, 2018, which was enhanced by a 36.9% increase inheld-to-maturity financial assets of ￦16,749 billion as of December 31, 2017 compared to securities at amortized cost of ￦22,933 billion as of December 31, 2018 and a 59.6% increase in due from banks from ￦8,868 billion as of December 31, 2017 to ￦14,151 billion as of December 31, 2018.
The increase in loans ~~and receivables~~ was mainly ~~the result of~~attributable to a ~~4.7%~~5.2% increase in loans in local currency from ~~￦191,309 billion as of December 31, 2016 to~~ ￦200,213 billion as of December 31, 2017 ~~and~~to ￦210,701 billion as of December 31, 2018, which was partially offset by a ~~90.4% increase~~30.6% decrease in bonds purchased under resale ~~agreement~~agreements from ~~￦8,855 billion as of December 31, 2016 to~~ ￦16,859 billion as of December 31, 2017 ~~the effect of which was partially offset by a 40.1% decrease in loans and receivables due from banks from ￦14,821~~to ￦11,702 billion as of December 31, ~~2016~~2018. The increase inheld-to-maturity financial assets as of December 31, 2017 compared to ~~￦8,871~~securities at amortized cost as of December 31, 2018 was primarily attributable to an 88.3% increase in such securities of Korean treasury and government agencies from ￦3,995 billion as of December 31, ~~2017.~~
~~Comparison of 2016~~2017 to ~~2015~~
~~Our total assets increased 6.4% from ￦291,859~~￦7,523 billion as of December 31, ~~2015 to ￦310,683~~2018 and a 30.8% increase in such securities of financial institutions from ￦7,245 billion as of December 31, ~~2016, primarily as a result of a 5.5% increase in loans and receivables from ￦244,842~~2017 to ￦9,475 billion as of December 31, ~~2015 to ￦258,393 billion as of December 31, 2016. This~~2018. The increase in ~~loans and receivables~~due from banks was mainly the result of a ~~3.3%~~76.7% increase in ~~loans in local currency~~amounts due from ~~￦185,155~~the Bank of Korea from ￦6,246 billion as of December 31, ~~2015~~2017 to ~~￦191,309~~￦11,035 billion as of December 31, ~~2016 and a 32.6% increase in loans and receivables due from banks from ￦11,181 billion as of December 31, 2015 to ￦14,821 billion as of December 31, 2016.~~2018.
Liabilities and Equity
The following table sets forth, as of the dates indicated, the principal components of our liabilities and our equity:

As of December 31, Percentage change    As of December 31, Percentage change
2015 2016 2017 2016/2015 2017/2016 2017 2018 2019 2018/2017 2019/2018
(in billions of Won) (%)    (in billions of Won) (%)
Liabilities:

Financial liabilities at fair value through profit or loss
￦ 3,461 ￦ 3,803 ￦ 3,428 9.9 % (9.9 )%
Financial liabilities at fair value through profit or loss (IFRS 9)
   ￦ — ￦ 2,283 ￦ 2,958 N/A ⁽¹⁾ 29.6 %
Financial liabilities at fair value through profit or loss (IAS 39)
   3,428 — — N/A N/A
Deposits due to customers
209,142 221,020 234,695 5.7 6.2    234,695 248,691 264,686 6.0 % 6.4
Borrowings
20,034 18,770 14,785 (6.3 ) (21.2 )    14,785 16,203 18,999 9.6 17.3
Debentures
21,899 23,566 27,869 7.6 18.3    27,870 28,736 30,858 3.1 7.4
Provisions
517 429 410 (17.0 ) (4.4 )    410 391 444 (4.6 ) 13.6
Other financial liabilities
16,964 21,985 13,892 29.6 (36.8 )    13,892 21,443 17,707 54.4 (17.4 )
Other liabilities⁽¹⁾
532 564 651 6.0 15.4
Other liabilities⁽²⁾
   651 747 837 14.7 12.0



Total liabilities
272,549 290,137 295,730 6.5 1.9    295,730 318,494 336,488 7.7 5.6



Equity:

Owner’s equity:

Capital stock
3,381 3,381 3,381 — —    3,381 3,381 3,611 — 6.8
Hybrid securities
3,334 3,575 3,018 7.2 (15.6 )    3,018 3,162 998 4.8 (68.4 )
Capital surplus
294 286 286 (2.7 ) —    286 286 626 — 118.9
Other equity
(1,547 ) (1,468 ) (1,939 ) (5.1 ) 32.1    (1,939 ) (2,214 ) (2,249 ) 14.2 1.6
Retained earnings
13,726 14,612 15,620 6.5 6.9
Retained earnings⁽³⁾
   15,620 17,125 18,525 9.6 8.2



Controlling interests
19,188 20,386 20,366 6.2 (0.1 )
   20,366 21,740 21,510 6.7 (1.1 )



Non-controlling interests
122 160 199 31.1 24.4    199 213 3,982 7.0 1769.5



Total equity
19,310 20,546 20,565 6.4 0.1    20,565 21,953 25,492 6.7 16.1



Total liabilities and equity
￦ 291,859 ￦ 310,683 ￦ 316,295 6.4 % 1.8 %    ￦ 316,295 ￦ 340,447 ￦ 361,981 7.6 6.3



⁽¹⁾
N/A = not applicable.
⁽²⁾
Includes net defined benefit liability, current tax liabilities, deferred tax liabilities, derivative liabilities and other liabilities.
⁽³⁾
Includes regulatory reserve for credit loss of ￦2,438 billion as of December 31, 2017, ￦2,578 billion as of December 31, 2018 and ￦2,356 billion as of December 31, 2019.
For further information on our liabilities, see “Item 4.B. Business Overview—Assets and Liabilities.”
Comparison of ~~2017~~2019 to ~~2016~~2018
Our total liabilities increased ~~1.9%~~5.6% from ~~￦290,137~~￦318,494 billion as of December 31, ~~2016~~2018 to ￦336,488 billion as of December 31, 2019, principally as a result of a 6.4% increase in deposits due to customers from ￦248,691 billion as of December 31, 2018 to ￦264,686 billion as of December 31, 2019. The increase in deposits due to customers was primarily due to a 9.8% increase in time deposits from ￦204,052 billion as of December 31, 2018 to ￦224,116 billion as of December 31, 2019, which was partially offset by an 85.0% decrease in certificates of deposits from ￦6,511 billion as of December 31, 2018 to ￦974 billion as of December 31, 2019.
Our total equity increased 16.1% from ￦21,953 billion as of December 31, 2018 to ￦25,492 billion as of December 31, 2019. Such increase mainly reflected a significant increase innon-controlling interests from ￦213 billion as of December 31, 2018 to ￦3,982 billion as of December 31, 2019, principally due to the classification of hybrid securities (issued by Woori Bank) asnon-controlling interests starting from January 11, 2019.
Comparison of 2018 to 2017
Our total liabilities increased 7.7% from ￦295,730 billion as of December 31, 2017 ~~primarily~~to ￦318,494 billion as of December 31, 2018, principally as a result of ~~increases~~a 6.0% increase in deposits due to customers ~~and debentures, the effect of which was partially offset by decreases in other financial liabilities and borrowings. Our deposits due to customers increased 6.2%~~ from ~~￦221,020 billion as of December 31, 2016 to~~ ￦234,695 billion as of December 31, 2017 ~~mainly~~to ￦248,691 billion as of December 31, 2018, which was enhanced by a 54.4% increase in other financial liabilities from ￦13,892 billion as of December 31, 2017 to ￦21,443 billion as of December 31, 2018. The increase in deposits due to customers was primarily due to a ~~5.8%~~5.0% increase in time deposits in local currency from ~~￦183,723 billion as of December 31, 2016 to~~ ￦194,293 billion as of December 31, ~~2017. Debentures increased 18.3% from ￦23,566~~2017 to ￦204,052 billion as of December 31, ~~2016 to ￦27,870~~2018. The increase in other financial liabilities primarily reflected a 444.7% increase in domestic exchange payables from ￦1,310 billion as of December 31, 2017 ~~primarily due~~ to ~~higher issuances of debentures in anticipation of rising interest rate levels. Other financial liabilities decreased 36.8% from ￦21,985~~￦7,135 billion as of December 31, ~~2016 to ￦13,892 as of December 31, 2017, principally due to an 84.6% decrease in domestic exchange payables from ￦8,481 billion as of December 31, 2016 to ￦1,310 billion~~
as of December 31, 2017. Borrowings decreased 21.2% from ￦18,770 billion as of December 31, 2016 to ￦14,785 as of December 31, 2017, primarily as a result of a significant decrease in bonds sold under repurchase agreements from ￦2,005 billion as of December 31, 2016 to ￦3 billion as of December 31, 2017.2018.
Our total equity ~~remained relatively stable at~~increased 6.7% from ￦20,565 billion as of December 31, 2017 ~~compared~~ to ~~￦20,546~~￦21,953 billion as of December 31, ~~2016. A 6.9%~~2018. Such increase mainly reflected a 9.6% increase in retained earnings from ~~￦14,612 billion as of December 31, 2016 to~~ ￦15,620 billion as of December 31, 2017 ~~was offset by a 15.6% decrease in hybrid securities from ￦3,575~~to ￦17,125 billion as of December 31, ~~2016 to~~2018, which was enhanced by a 4.8% increase in hybrid securities from ￦3,018 billion as of December 31, 2017 ~~and~~to ￦3,162 billion as of December 31, 2018. Such increases were partially offset by a ~~32.1%~~14.2% increase in negative other equity from ~~￦1,468 billion as of December 31, 2016 to~~ ￦1,939 billion as of December 31, ~~2017. The~~2017 to ￦2,214 billion as of December 31, 2018, primarily reflecting a significant increase in ~~retained earnings~~accumulated other comprehensive loss from ￦90 billion as of December 31, 2017 to ￦572 billion as of December 31, 2018, which was ~~attributable mainly to the net income we generated in 2017. The~~partially offset by an 11.4% decrease ~~in hybrid securities was principally due to the redemptions ofWon-denominated~~ ~~hybrid securities in March 2017 and U.S.dollar-denominated~~ ~~hybrid securities in May 2017, which were offset in part by the issuance of U.S.dollar-denominated~~ ~~hybrid securities in May 2017. The increase in negative other equity was primarily attributable to a 12.9% increase~~ in negative other capital adjustments from ~~￦1,607 billion as of December 31, 2016 to~~ ￦1,815 billion as of December 31, 2017 ~~and a more thanfour-fold~~ ~~increase in loss on foreign currency translation of foreign operations from ￦48~~to ￦1,608 billion as of December 31, ~~2016~~2018. The increase in accumulated other comprehensive loss was principally attributable to ~~￦243~~a change from gain on valuation ofavailable-for-sale financial assets of ￦302 billion as of December 31, ~~2017.~~
~~Comparison of 2016 to 2015~~
Our total liabilities increased 6.5% from ￦272,549 billion as of December 31, 2015 to ￦290,137 billion as of December 31, 2016, primarily as a result of increases in deposits due to customers and other financial liabilities. Our deposits due to customers increased 5.7% from ￦209,142 billion as of December 31, 2015 to ￦221,020 billion as of December 31, 2016, mainly as a result of a 4.6% increase in time deposits in local currency from ￦175,599 billion as of December 31, 2015 to ￦183,723 billion as of December 31, 2016. Other financial liabilities increased 29.6% from ￦16,964 billion as of December 31, 2015 to ￦21,985 billion as of December 31, 2016, which was principally due2017 to a ~~more thanfour-fold~~ ~~increase in domestic exchange payables from ￦2,082~~net loss on valuation of financial assets at fair value through other comprehensive income of ￦87 billion, ~~as of December 31, 2015 to ￦8,481 billion as of December 31, 2016.~~
~~Our total equity increased 6.4% from ￦19,310 billion as of December 31, 2015 to ￦20,546 billion as of December 31, 2016. This increase resulted~~resulting mainly from a 6.5% increase in retained earnings from ￦13,726 billion as of December 31, 2015 to ￦14,612 billion as of December 31, 2016, which was enhanced by a 7.2% increase in hybrid securities from ￦3,334 billion as of December 31, 2015 to ￦3,575 billion as of December 31, 2016. The increase in retained earnings was attributable mainlyadjustments relating to the ~~net~~reclassification of certainavailable-for-sale financial assets under IAS 39 to financial assets at fair value through other comprehensive income ~~we generated~~and financial assets at fair value through profit or loss under IFRS 9. For further information regarding the impact of the adoption of IFRS 9 on our equity, see Note2-(1)-1)-e) of the notes to our consolidated financial statements included elsewhere in ~~2016. The increase in hybrid securities was principally due to the issuance of U.S.dollar-denominated~~ ~~hybrid securities in September 2016, which was offset in part by the redemption ofWon-denominated~~ ~~hybrid securities in November 2016.~~this annual report.
Liquidity
Our primary source of funding has historically been and continues to be customer deposits, particularlylower-cost retail deposits. Customer deposits amounted to ~~￦209,142~~￦234,695 billion, ~~￦221,020~~￦248,691 billion and ~~￦234,695~~￦264,686 billion as of December 31, ~~2015, 2016~~2017, 2018 and ~~2017,~~2019, which represented approximately ~~82.2%~~82.7%, ~~82.8%~~82.7% and ~~82.7%~~83.0% of our total funding, ~~respectively. We~~respectively.We have historically been able to use customer deposits to finance our operations generally, including meeting a portion of our liquidity requirements. Although the majority of deposits are~~short-term,~~ short term, it has been our experience that the majority of our depositors generally roll over their deposits at maturity, thus providing us with a stable source of funding. However, in the event that a substantial number of our depositors do not roll over their deposits or otherwise decide to withdraw their deposited funds, we would need to place increased reliance on alternative sources of funding, some of which may be more expensive than customer deposits, in order to finance our operations. See “Item 3.D. Risk Factors—Other risks relating to our business—Our funding is highly dependent onshort-term deposits, which dependence may adversely affect our operations.” In particular, we may increase our utilization of alternative funding sources such asshort-term borrowings and cash and cash equivalents (including funds from maturing loans), as well as liquidating our positions in trading and investment securities and using the proceeds to fund parts of our operations, as necessary.
We also obtain funding through borrowings and issuances of debentures to meet our liquidity needs. Borrowings represented ~~7.9%~~6.4%, ~~7.0%~~6.6% and ~~6.4%~~7.0% of our total funding as of December 31, ~~2015, 2016~~2017, 2018 and ~~2017,~~2019, respectively. Debentures represented ~~8.6%~~9.8%, ~~8.8%~~9.6% and ~~9.8%~~9.7% of our total funding as of December 31, ~~2015, 2016~~2017, 2018 and ~~2017,~~2019, respectively. For further information on our sources of funding, see “Item 4.B. Business Overview—Assets and Liabilities—Funding.”
Our liquidity risks arise from withdrawals of deposits and maturities of our borrowings and debentures, as well as our need to fund our lending, trading and investment activities and to manage our trading positions. Our
goal in managing our liquidity is to be able, even under adverse conditions, to meet all of our liability repayments on time and to fund all investment opportunities. For a discussion of how we manage our liquidity risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Liquidity Risk Management.”
The Financial Services Commission requires each Korean financial holding company and each Korean bank to maintain specific Won and foreign currency liquidity ratios. These ratios require us to keep our ratio of liquid assets to liquid liabilities above certain minimum levels. For a description of these requirements, see “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Liquidity” and “—Principal Regulations Applicable to Banks—Liquidity.” We are currently in compliance with all such requirements. In addition, notwithstanding any global economic and financial disruption resulting from the recentCOVID-19 pandemic, we do not expect to experience issues relating to foreign currency liquidity due to the low likelihood of large withdrawals of foreign currency and our access to existing lines of credit in foreign currency.
We are a financial holding company, and substantially all of our operations are in our subsidiaries. Accordingly, we rely on distributions from our subsidiaries, direct borrowings and issuances of debt and equity securities to fund our liquidity obligations at the holding company level. See “Item 3.D. Risk Factors—Risks relating to our financial holding company structure and strategy.”
Contractual Obligations andOff-Balance Sheet Arrangements
The following table sets forth our contractual obligations as of December 31, ~~2017:~~2019:

Payments due by period    Payments due by period
Total Less than
1 year 1-3 years 3-5 years More than
5 years    Total    Less than
1 year    1-3 years    3-5 years    More than
5 years
(in billions of Won)    (in billions of Won)
Contractual obligations

Borrowing obligations⁽¹⁾
￦ 15,081 ￦ 10,676 ￦ 3,048 ￦ 877 ￦ 480    ￦ 19,791    ￦ 15,588    ￦ 2,817    ￦ 865    ￦ 521
Debenture obligations⁽¹⁾
29,811 7,171 14,910 4,860 2,870    32,818    11,070    13,112    6,099    2,537
Deposits⁽²⁾⁽³⁾
238,250 228,216 6,447 962 2,625    267,508    259,040    5,933    657    1,878
Capital (finance) lease obligations
2 2 — — —
Operating lease obligations
1,513 260 493 486 274
Lease obligations
   435    161    142    91    41
Purchase obligations
65 14 20 20 11    87    17    28    28    14
Employee severance plan obligations
2,329 68 160 128 1,973    2,737    16    163    146    2,412











Total
￦ 287,051 ￦ 246,407 ￦ 25,078 ￦ 7,333 ￦ 8,233    ￦ 323,376    ￦ 285,892    ￦ 22,195    ￦ 7,886    ￦ 7,403











⁽¹⁾
Includes estimated future interest payments, which have been estimated using contractual interest rates and scheduled contractual maturities of the outstanding borrowings and debentures as of December 31, ~~2017.~~2019. In order to calculate future interest payments on debts with floating rates, we used contractual interest rates as of December 31, ~~2017.~~2019.
⁽²⁾
Comprising certificates of deposit, other time deposits and installment deposits.
⁽³⁾
Includes estimated future interest payments, which have been estimated using weighted average interest rates paid ~~for 2017~~in 2019 for each deposit product category and their scheduled contractual maturities.
We utilizecredit-related financial instruments withoff-balance sheet risk in our normal course of business. The primary purpose of those instruments is to generate fee income for us, in return for making credit support and funds available to our customers as required. Such instruments consist primarily of guarantees, commercial letters of credit and unused lines of credit. Guarantees include guarantees for loans, debentures, trade financing arrangements and guarantees for other financings. Contingent liabilities for which guaranteed amounts are not finalized appear asoff-balance sheet items in the notes to the financial statements. Such contingent liabilities include, among others, contingent liabilities relating to trade financings and derivatives contracts with respect to foreign exchange rates and interest rates.
We also enter into transactions with certain structured entities, including through the purchase of their subordinated debt and the provision of credit facilities to them. For further information, see Notes1-(5) and1-~~(7)~~(6) of the notes to our consolidated financial ~~statements.~~statements included elsewhere in this annual report.
The following table sets forth ouroff-balance sheet guarantees and commitments as of the dates indicated:

   As of December 31,    As of December 31,
   2015    2016    2017    2017    2018    2019
   (in billions of Won)    (in billions of Won)
Confirmed guarantees
   ￦ 9,069    ￦ 8,270    ￦ 6,875    ￦ 6,875    ￦ 7,108    ￦ 7,689
Guarantees for loans
   108    80    157    157    126    90
Acceptances
   618    504    321    321    372    392
Letters of guarantee
   100    98    108
Guarantees in acceptances of imported goods
   108    158    225
Other confirmed guarantees
   8,243    7,588    6,289    6,289    6,453    6,983
Unconfirmed guarantees
   6,631    5,102    4,527    4,527    4,297    4,046
Local letters of credit
   423    398    383
Import letters of credit
   4,258    3,844    3,638
Local letter of credit
   383    305    193
Letter of credit
   3,638    3,323    3,081
Other unconfirmed guarantees
   1,950    860    506    506    670    771
Commercial paper purchase commitments and others
   1,615    1,390    1,458    1,458    1,261    884
Loan commitments and others
   93,583    88,636    85,306
Loan commitments and others:

Loans
   88,212    83,795    80,760    80,760    97,797    103,652
Others
   5,371    4,841    4,546    4,546    5,041    5,994
We analyze ouroff-balance sheet legally bindingcredit-related commitments for possible losses associated with such commitments. We review the ability of the counterparties of the underlyingcredit-related commitments to perform their obligations under the commitments and, if we determine that a loss is probable and estimable, we establish allowances for possible losses in a manner similar to allowances that we would establish with respect to a loan granted under the terms of the applicable commitment. These allowances are reflected as provisions in our statement of financial position. As of December 31, ~~2017,~~2018, we had established provisions for possible losses of ~~￦249~~￦205 billion with respect to our~~credit-related~~ guarantees and loan commitments.
Capital Adequacy
We are subject to the capital adequacy requirements of the Financial Services Commission. The requirements applicable commencing in December 2013 pursuant to amended Financial Services Commission regulations promulgated in July 2013 were formulated based on Basel III, which was first introduced by the Basel Committee on Banking Supervision, Bank for International Settlements in December 2009. Under the amended Financial Services Commission regulations, all financial holding companies and banks in Korea are required to maintain certain minimum ratios of Tier I common equity capital, total Tier I capital and total Tier I and Tier II capital torisk-weighted assets. See “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies Capital Adequacy” and “—Principal Regulations Applicable to Banks—Capital Adequacy.”
If a financial holding company or a bank fails to maintain its capital adequacy ratios, the Korean regulatory authorities may impose penalties on such financial holding company or bank ranging from a warning to suspension or revocation of its license. See “Item 3.D. Risk Factors—Other risks relating to our business—We may be required to raise additional capital if our capital adequacy ~~ratio deteriorates~~ratios deteriorate or the applicable capital requirements change in the future, but we may not be able to do so on favorable terms or at all.”
The following table sets forth a summary of our capital and capital adequacy ratios as of December 31, ~~2015, 2016~~2017, 2018 and ~~2017~~2019 based on IFRS and applicable regulatory reporting standards:

   As of December 31,    As of December 31,
   2015 2016 2017    2017 2018 2019
   (in billions of Won, except percentages)    (in billions of Won, except percentages)
Tier I capital

Tier I common equity capital

Capital stock
   ￦ 3,381 ￦ 3,381 ￦ 3,381    ￦ 3,381 ￦ 3,381 ￦ 3,611
Capital surplus
   294 286 286    286 286 626
Retained earnings
   11,471 14,612 15,620    15,620 17,125 18,525
Non-controlling interests in consolidated subsidiaries
   14 22 19    19 22 20
Others
   (2,112 ) (2,586 ) (3,231 )    (3,231 ) (3,538 ) (3,647 )




Additional Tier I capital

Hybrid securities
   2,970 3,232 3,006    3,006 3,130 998
Other equity
   46 43 35    35 17 2,343




Total Tier I capital
   ￦ 16,064 ￦ 18,990 ￦ 19,116    ￦ 19,116 ￦ 20,423 ￦ 22,476




Tier II capital

Allowance for credit losses⁽¹⁾
   ￦ 1,145 ￦ 145 ￦ 78    ￦ 78 ￦ 194 ￦ 1,209
Subordinated debt
   3,831 2,292 1,870    1,870 1,507 —
Valuation gain on investment securities
   — — —
Others
   11 1,474 1,539    1,539 2,127 3,431




Total Tier II capital
   ￦ 4,987 ￦ 3,911 ￦ 3,487    ￦ 3,487 ￦ 3,828 ￦ 4,640




Total Tier I and Tier II capital
   ￦ 21,051 ￦ 22,901 ￦ 22,603    ￦ 22,603 ￦ 24,251 ￦ 27,116




Risk-weighted assets

Creditrisk-weighted assets
   ￦ 142,127 ￦ 138,018 ￦ 134,768    ￦ 134,768 ￦ 142,626 ￦ 209,803
Marketrisk-weighted assets
   2,596 2,278 2,317    2,317 2,372 5,587
Operationalrisk-weighted assets
   9,348 9,432 9,677    9,677 9,973 12,656




Total
   ￦ 154,071 ￦ 149,728 ￦ 146,762    ￦ 146,762 ￦ 154,971 ￦ 228,046




Tier I common equity capital ratio
   8.47 % 10.50 % 10.95 %    10.95 % 11.15 % 8.39 %
Total Tier I capital ratio
   10.43 % 12.68 % 13.03 %    13.03 13.18 9.86
Tier II capital ratio
   3.23 % 2.61 % 2.37 %    2.37 2.47 2.03
Total Tier I and Tier II capital ratio
   13.66 % 15.29 % 15.40 %    15.40 15.65 11.89

⁽¹⁾
Allowance for credit losses in respect of credits classified as normal or precautionary ~~are~~is used to calculate Tier II capital only to the extent such allowances represent up to 1.25% ofrisk-weighted assets.
Recent Accounting Pronouncements
~~IFRS 9~~~~Financial Instruments~~, issued by the IASB in July 2014, is a new IFRS accounting standard aimed at improving and simplifying the accounting treatment of financial instruments and is effective for annual periods beginning on or after January 1, 2018. IFRS 9, which replaces International Accounting Standard 39,~~Financial Instruments: Recognition and Measurement~~, requires financial assets to be classified and measured on the basis of an entity’s business model for managing financial assets and the contractual cash flow characteristics of the financial assets. A new impairment model is introduced which requires the calculation of allowance for credit losses based on expected credit losses instead of incurred losses (as is the case under International Accounting Standard 39) by assessing changes in expected credit losses and recognizing such changes as impairment loss (or reversal of impairment loss) in profit or loss. Also, hedge accounting rules are amended to extend to more hedging relationships and to allow more hedging instruments and hedged items to qualify for hedge accounting. The impact on our financial statements due to the application of IFRS 9 will depend on judgments made by us in applying the new standard, the nature of financial instruments held by us and macroeconomic variables.
We have performed an assessment of the financial impact of IFRS 9 on our consolidated financial statements. The application of IFRS 9 will result in higher impairment loss allowances that are recognized earlier, on a more~~forward-looking~~ basis and on a broader scope of financial instruments than is the case under International Accounting Standard 39 and, as a result, will have a material impact on our reported financial condition. In addition, the move from incurred to expected credit losses will have the potential to impact our performance under stressed economic conditions or regulatory stress tests. In particular, the application of IFRS 9 will result in a~~one-off~~ increase in allowance for credit losses and a corresponding decrease in our retained earnings in our consolidated statement of financial position, which could also negatively impact our regulatory capital position. Measurement will require increased complexity in our impairment modeling as it will involve a greater degree of management judgment with respect to~~forward-looking~~ ~~information. We expect that impairment charges will tend to be more volatile as a result. For further information regarding IFRS 9, see~~See Note2-(1)-2) of the notes to our consolidated financial ~~statements.~~
~~For~~statements for a description of other recent accounting pronouncements under IFRS as issued by the IASB that have been issued but are not yet ~~effective, seeNote 2-(1)-2)~~ ~~of the notes to our consolidated financial statements.~~effective.

Item 5.C.
Research and Development, Patents and Licenses, etc.
Not Applicable

Item 5.D.
Trend Information
These matters are discussed under Item 5.A and Item 5.B above where relevant.

Item 5.E.
Off-Balance Sheet Arrangements
See “Item 5.B. Liquidity and Capital Resources—Financial Condition—Contractual Obligations andOff-Balance Sheet Arrangements.”
Item 5.F.
Tabular Disclosure of Contractual Obligations
See “Item 5.B. Liquidity and Capital Resources—Financial Condition—Contractual Obligations andOff-Balance Sheet Arrangements.”

Item 5.G.
Safe Harbor
See “Forward-Looking Statements.”

Item 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Item 6.A.
Directors and Senior Management
Board of Directors
Our board of directors has the ultimate responsibility for managing our affairs. The board currently comprises two standing directors, onenon-standing director and ~~five~~six outside directors. Standing directors are directors who are ~~either~~ our full-time executive officers, ~~or our standing Audit Committee members,~~ whilenon-standing directors and outside directors are directors who are not full-time executive officers. Outside directors represent a cross-section of respected and experienced members of the academic, financial, corporate and other fields in Korea and elsewhere, and must also satisfy certain requirements under Korean law and our articles of incorporation to evidence their independence from us.
Our articles of incorporation provide that the board can have no ~~less~~more than ~~five~~15 directors. ~~Standing directors must comprise less than 50% of the total number of directors, and there~~There must be at least three outside directors and they must comprise a majority of the directors. Each director may be elected for a term of office not exceeding three years and may bere-elected, provided that each outside director may be elected for a term of office not exceeding ~~three~~two years and may bere-elected on an annual basis but may not serve in such office for more than a total of six ~~consecutive~~ years. In addition, with respect to all
directors, such term of office iswill be extended until the close of the annual general meeting of shareholders convened in respect of the last fiscal year of the director’s term of office. These terms are subject to the Korean Commercial Code, the ~~Bank~~Financial Holding Company Act and related regulations.
Pursuant to an agreement we entered into with the KDIC in ~~December 2016,~~July 2019, we are required to use our best efforts to cause an employee of the KDIC nominated by it to be appointed as ournon-standing director, so long as the KDIC either (x) owns 10% or more of our ~~total~~ issued shares with voting rights or (y) owns more than 4% but less than 10% of our total issued shares with voting rights and remains our largest shareholder (other than the National Pension Service of Korea)~~. See~~.See “Item 10.C. Material Contracts.”
Our board of directors meets regularly on a quarterly basis to discuss and resolve various corporate matters. The board may also convene for additional extraordinary meetings at the request of the president or chairman of the board. A director (other than the president or chairman of the board) may request the president or chairman of the board to convene an extraordinary meeting. In the event that the president or chairman of the board rejects such request without justifiable reason, another director may convene the extraordinary meeting.
The names and positions of our directors are set forth below. The business address of all of the directors is our registered office at 51,Sogong-ro,Jung-gu, Seoul, Korea.
Standing ~~Directors~~Director
Our standing directors are as follows:

Name
~~Age~~
Date of Birth

Position

Director Since
~~Tae-Seung Sohn~~
60Year Term
Ends⁽¹⁾
Tae-Seung Son
May 16, 1959 President and Chief Executive Officer December 22, 2017
~~Jung-Sik Oh~~
⁽²⁾ 622023
Won-Duk Lee
January 15, 1962 Director and ~~Standing Audit Committee Member~~Deputy President March ~~24, 2017~~25, 2020 2021
~~None of these directors is involved in any significant business activities outside us and our subsidiaries.~~
⁽¹⁾
The date on which the term will end will be the date of the general shareholders’ meeting in the relevant year.
⁽²⁾
Prior to January 11, 2019, served as a director of Woori Bank.
Tae-Seung ~~Sohn~~ Sonis our president and chief executive ~~officer. He was appointed~~officer and also served as the president and chief executive officer inof Woori Bank from December ~~2017.~~2017 to March 2020. Previously, he served as ~~head~~a deputy
president of the global business ~~unit. Prior to that, he was a managing director~~unit of ~~the financial market business division.~~Woori Bank. Mr. Sohn holds a Bachelor of Laws from Sungkyunkwan University, a Master of Laws from Seoul National University and a Master of Business Administration from the Helsinki School of Economics.
~~Jung-Sik Oh~~Won-Duk Lee~~is a standing Audit Committee member. He was appointed~~serves as ~~a standing Audit Committee member in March 2017. Prior to joining us,~~deputy president of our strategy planning unit. Previously, he ~~was the representative~~served as executive vice president and managing director of ~~KB Capital.~~the management and finance planning group of Woori Bank. He holds a Bachelor of Science in Agriculture and a Master of Arts in ~~International~~ Economics from Seoul National University.
Such directors are not involved in any significant business activities outside us and our subsidiaries.
Non-Standing Director
Our non-standing director is as follows:

Name
   Age    Position    Director Since    Year Term
Ends⁽¹⁾
Chang-Sik Bae
   54    Non-Standing��Director    March 23, 2018    2020
Name
Date of Birth Position Director Since Year Term
Ends⁽¹⁾
Hong-Tae Kim
February 20, 1966 Non-Standing Director March 25, 2020 2022

⁽¹⁾
The date on which the term will end will be the date of the general shareholders’ meeting in the relevant year.
~~Chang-Sik Bae~~Hong-Tae Kimwas elected as anon-standing director in March ~~2018.~~2020. He currently serves as ~~the head~~Head of ~~the Office of Human Resources Development~~Creative Management at the KDIC. He holds a Bachelor of Arts in International ~~Trade~~Economics from ~~Hankuk University of Foreign Studies.~~Seoul National University.
Outside Directors
We currently have ~~five~~six outside directors. Pursuant to a commitment made by the KDIC in connection with the bidding process for the sale of a combined 29.7% ownership interest in usWoori Bank in December 2016 and January 2017, five of the seven winning bidders each nominated one person to become a new outside director, and each
such nominee was elected as a new outside director at an extraordinary general meeting of ~~our~~Woori Bank’s shareholders held in December 2016. In December 2018, five persons, each nominated by one of such winning bidders, were elected at an extraordinary general meeting of Woori Bank’s shareholders to serve as our outside directors upon our establishment, and in March 2020, one person nominated by Fubon Life Insurance Co., Ltd., pursuant to a commitment made by Woori Bank in connection with its disposal of 42,103,377 shares of our common stock in September 2019, was elected at the annual general meeting of our shareholders to serve as our outside director. Three of our outside directors concurrently serve as outside directors of Woori Bank. See “Item 4.A. History and Development of the Company—Privatization Plan—Sales of the KDIC’s Ownership ~~Interest.~~Interest” and “Item 4.A. History and Development of the Company—Establishment of Woori Financial Group—Reorganization and Expansion of Woori Financial Group.”
Our outside directors are as follows:

Name
   ~~Age~~Date of Birth    Position
~~Position~~
   Director Since ~~End of~~ Year Term Ends⁽¹⁾
~~Dong-Woo Chang~~Sung-Tae Ro
   51September 1946    Outside Director ~~December 30, 2016~~    December 30, ~~2018~~2016 ⁽²⁾ 2021
Sang-Yong Park
   67February 1951    Outside Director ~~December 30, 2016~~    December 30, ~~2018~~2016 ⁽²⁾ 2021
~~Sung-Tae Ro~~Chan-Hyoung Chung
   71February 1956    Outside Director December ~~30, 2016~~28, 2018 ⁽²⁾ ~~December 30, 2018~~2021
~~Sang-Hoon Shin~~Dennis Chan
   69November 1962    Outside Director ~~December 30, 2016~~ March 25, 2020 ~~December 30, 2018~~ 2022
Zhiping Tian
   52February 1966    Outside Director December 30, 2016 ⁽²⁾ 2021
Dong-Woo Chang
January 1967 Outside Director    December 30, ~~2018~~2016 ⁽²⁾ 2021
⁽¹⁾
The date on which the term will end will be the date of the general shareholders’ meeting in the relevant year.
⁽²⁾
Prior to January 11, 2019, served as a director of Woori Bank.
~~Dong-Woo Chang~~Sung-Tae Rowas elected as an outside director in December ~~2016. He~~2018 and was previously and is currently ~~the chief executive officer and representative~~an outside director of ~~IMM Investment Corp.~~Woori Bank. He ~~received~~currently serves as chairman of Samsung Dream Scholarship Foundation. He holds a Bachelor of ~~Laws~~Arts in Economics from ~~Hanyang~~Seoul National University and a Master of Arts and a Ph.D. in ~~1991.~~Economics from Harvard University.
Sang-Yong Parkwas elected as an outside director in December ~~2016.~~2018 and was previously and is currently an outside director of Woori Bank. He also currently serves as ~~an honorary~~ professor emeritus at the School of Business at Yonsei University. He ~~received~~holds a Bachelor of Arts in Business Administration from Yonsei University ~~in 1973~~ and a Master of Business Administration and a Ph.D. in Business Administration from New York ~~University in 1982 and 1984, respectively.~~University.
~~Sung-Tae Ro~~Chan-Hyoung Chung was elected as an outside director in December ~~2016.~~2018 and is currently an outside director of Woori Bank. He ~~previously served as the president of Hanwha Life Economic Research Institute and Korea Economic Research Institute. He received~~holds a Bachelor of Arts in ~~Economics from Seoul National University in 1969~~Business Administration and a Master of Business Administration from Korea University.
Dennis Chanwas elected as an outside director in March 2020. He previously served as vice chairman of Fubon Bank. He holds a Bachelor of Arts in Business Administration from Taipei National University and a ~~Ph.D. in Economics~~Master of Business Administration from ~~Harvard University in 1983 and 1984, respectively.~~Georgetown University.
~~Sang-Hoon Shin~~Zhiping Tianwas elected as an outside director in December ~~2016. He~~2018 and was previously served as the president and chief executive officer of Shinhan Financial Group. He received a Bachelor of Arts in Business Administration from Sungkyunkwan University in 1976 and a Master of Business Administration from Yonsei University Graduate School of Business in 1987.
~~Zhiping Tian~~ ~~was elected as~~ an outside director ~~in December 2016.~~of Woori Bank. He currently serves as a vice general manager at China Fellow Partners Limited. He ~~received~~holds a Bachelor of Arts in Government Economics Management from Shanxi University of Finance & Economics, ~~in 1988,~~ an International Master of Business Administration from the University of Hong Kong and a Master of Business Administration from the Southwestern University of Finance and ~~Economics~~Economics.
Dong-Woo Changwas elected as an outside director in ~~2005.~~December 2018 and was previously an outside director of Woori Bank. He is currently the chief executive officer and representative director of IMM Investment Corp. He holds a Bachelor of Laws from Hanyang University.
If any director wishes to enter into a transaction with us in his or her personal capacity, he or she must obtain the prior approval of our board of directors. The director having an interest in the transaction may not vote at the meeting during which the board approves the transaction.
Executive Officers
In addition to the standing directors who are also our executive officers, we currently have the following 2213 executive officers.

Name
   ~~Age~~Date of Birth
Position
~~An-Ho Jang~~
60 ~~Executive Vice President~~
~~Woon-Haeng Cho~~
59 ~~Executive Vice President~~
~~Seong-Il~~Kyong-Hoon Park
   62December 19, 1962    ~~Compliance Officer~~Deputy President
~~Sun-Kyu~~Dong-Su Choi
September 25, 1962 Deputy President
Jeong-Ki Kim
   60May 15, 1962    ~~Executive Vice~~Deputy President
~~Yeong-Bae Kim~~
62 ~~Executive Vice President~~
~~Jeong-Jin Heo~~
61 ~~Executive Vice President~~
~~Dong-Yeon Lee~~
59 ~~Executive Vice President~~
~~Hyun-Poong Hong~~
61 ~~Executive Vice President~~
~~Chai-Pong Cheong~~
60 ~~Executive Vice President~~
~~Name~~
~~Age~~
~~Position~~
~~Chang-Jae Lee~~
58 ~~Executive Vice President~~
~~Jeong-Ki Kim~~
58 ~~Executive Vice President~~
~~Tae-Joong Ha~~
60 ~~Managing Director~~
~~Jong-In Lee~~
60 ~~Managing Director~~
~~Won-Duk Lee~~
58 ~~Managing Director~~
~~Hong-Sik Choi~~
60 ~~Managing Director~~
~~Su-Hyeong Cho~~
59 ~~Managing Director~~
~~Hwa-Jae Park~~
59 ~~Managing Director~~
Myung-Hyuk Shin
   59November 29, 1961    Deputy President
Jin-Ho Noh
February 2, 1964 Deputy President
Seok-Tae Lee
July 13, 1964 Senior Managing Director
Kyu-Mok Hwang
February 12, 1963 Senior Managing Director
Seok-Young Chung
December 21, 1964 Senior Managing Director
Jongil Park
September 28, 1964    Managing Director
~~Dong-Su Choi~~Sung-Wook Lee
   58 November 13, 1965    Managing Director
~~Jong-Suk Jeong~~Gyu-Soon Hwang
   58 September 20, 1964    Managing Director
~~Kyong-Hoon Park~~Shin-Kook Kang
   58 May 3, 1964    Managing Director
~~Jong-Deuk Kim~~Byoung-Kwon Woo
   57 November 28, 1964    Managing Director and Compliance Officer
~~An-Ho Jang~~Kyong-Hoon Parkserves as a deputy president of the finance planning unit as well as anon-standing director of Woori Finance Research Institute and Woori Asset Trust. Previously, he served as a deputy president of the management and finance planning unit and a senior general manager of the future strategy division of Woori Bank. He holds a Bachelor of Arts in International Economics from Seoul National University.
Dong-Su Choi serves as a deputy president of the consumer protection and management support unit as well as an auditor of Woori Finance Research Institute and Woori Credit Information. Previously, he served as a deputy president of the management support unit and a managing director of the future strategy division of Woori Bank. He holds a Bachelor of Arts in Economics fromChung-Ang University and a Master of Business Administration from Korea University.
Jeong-Ki Kimserves as ~~an executive vice~~a deputy president ~~in charge~~ of the ~~domestic~~ business ~~unit and head of the retail banking business group.~~management unit. Previously, he served as an executive vice president and head of the corporate banking business group. Prior to serving as executive vice president, he was a managing director of the human resources division. He holds a Bachelor of Arts in French Literature from Chonbuk National University.
~~Woon-Haeng Cho~~ ~~serves as an executive vice president in charge~~ of the business support unit and ~~head of~~ the human resources ~~group. Previously, he served as an executive vice president and head~~group of the institutional banking business group. Prior to serving as executive vice president, he was a managing director of the operation and support division. He holds a Bachelor of Arts in Business Administration from Kyunghee University.
~~Seong-Il Park~~ serves as an executive vice president and the compliance officer. Prior to serving as executive vice president, he was the compliance officer and a managing director. He holds a Bachelor of Arts in Business Administration from Chungnam National University.
~~Sun-Kyu Kim~~ serves as an executive vice president and head of the credit support group. Prior to serving as executive vice president, he was a managing director of the corporate restructuring division. He holds a Bachelor of Arts in International Trade from Sejong University.
~~Yeong-Bae Kim~~ serves as an executive vice president and head of the international trade business group. Previously, he served as a managing director and head of the international trade business division. Prior to serving as managing director, he was the senior general manager of the Daegu-Gyeongbuk regional banking headquarters. He is a graduate of Daegu Commercial High School.
~~Jeong-Jin Heo~~ serves as an executive vice president in charge of the institutional banking business group and head of the information security division. Previously, he served as a managing director and head of the information security division. Prior to serving as managing director, he was the senior general manager of the information security department. He holds a Bachelor of Arts in International Trade from Kookje University.
~~Dong-Yeon Lee~~ serves as an executive vice president and head of the small and medium corporate banking business group. Previously, he was the senior general manager of the loan service center. He holds a Master of Arts in Political Administration Leadership from the Graduate School of Public Administration of Yonsei University.
~~Hyun-Poong Hong~~ serves as an executive vice president in charge of the digital business group. Previously, he served as a managing director and head of the next generation ICT system building division. Prior to serving as managing director, he was the senior general manager of the next generation ICT system building division. He holds a Bachelor of Arts in Economics from Hanyang University.
~~Chai-Pong Cheong~~ serves as an executive vice president in charge of the investment banking business group. Previously, he served as a managing director and head of the wealth management group. Prior to serving as managing director, he was the senior general manager of the wealth management division. He holds a Ph.D. in Business Administration from Dongguk University.
~~Chang-Jae Lee~~ serves as an executive vice president in charge of the real estate finance business group. Previously, he served as a managing director and head of the pension and trust business group. Prior to serving as managing director, he was the senior general manager of the regional banking headquarters. He holds a Bachelor of Arts in Real Estate Studies from Seoul Digital University.
~~Jeong-Ki Kim~~ serves as an executive vice president in charge of the corporate banking business group. Previously, he served as a managing director and head of the external relations division. Prior to serving as managing director, he was the senior general manager of the regional banking headquarters.Woori Bank. He holds a Bachelor of Arts in Agricultural Economics from Chungbuk National University.
~~Tae-Joong Ha~~ serves as a managing director and head of the corporate restructuring division. Prior to serving as managing director, he was the senior general manager of the head office corporate banking headquarters. He holds a Bachelor of Arts in Accounting from Kyungpook National University.
~~Jong-In Lee~~ serves as a managing director and head of the risk management group. Previously, he served as a managing director and head of the financial market business group. Prior to serving as managing director, he was the senior general manager of the regional banking headquarters. He holds a Master of Arts in Financial Management from Korea University Business School.
~~Won-Duk Lee~~ serves as a managing director and head of the management and finance planning group. Previously, he served as a managing director and head of the future strategy division. Prior to serving as managing director, he was the senior general manager of the future strategy department. He holds a Master of Arts in Economics from Seoul National University.
~~Hong-Sik Choi~~serves as a managing director and head of the next generation ICT system building division. Prior to serving as managing director, he was the senior general manager of the regional banking headquarters. He holds a Bachelor of Arts in Business Administration from Korea National Open University.
~~Su-Hyeong Cho~~serves as a managing director and head of the consumer and brand group. Prior to serving as managing director, he was the senior general manager of the corporate banking headquarters. He holds a Bachelor of Arts in Sociology from Sungkyunkwan University.
~~Hwa-Jae Park~~serves as a managing director and head of the operation and support group. Prior to serving as managing director, he was the senior general manager of the regional banking headquarters. He holds a Bachelor of Arts in Business Administration from Korea Soongsil Cyber University and a Master of Arts in Business Administration from Dongguk University.
Myung-Hyuk Shin serves as a ~~managing director and head~~deputy president of the ~~pension and trust~~wealth management business ~~group. Prior to serving~~division as ~~managing director,~~well as an executive vice president of Woori Bank. Previously, he ~~was the senior general manager~~served as a deputy executive vice president of the ~~regional banking headquarters.~~wealth management group of Woori Bank. He holds a Bachelor of Arts in Chinese from Hankuk University of Foreign Studies.
~~Dong-Su Choi~~Jin-Ho Noh serves as a ~~managing director and head~~deputy president of the ~~future strategy division.~~IT and digital unit as well as anon-standing director of Woori FIS and a deputy president of Woori Card. Previously, he served as ~~head~~a senior managing director of the ~~head office business department~~ICT planning division and ~~the consumer protection center. He holds a Bachelor~~representative director of ~~Arts in Economics from Chung-Ang University and a Master of Arts in Business Administration from Korea University Business School.~~
~~Jong-Suk Jeong~~ ~~serves as a managing director and head of the wealth management group. Prior to serving as managing director, he was the senior general manager of the regional banking headquarters.~~Hancom Inc. He holds a Bachelor of Arts in Business Administration from Korea ~~National Open~~University and a Master of Arts in Management Science from Lancaster University.
Seok-Tae Lee serves as a senior managing director of the new business division as well as anon-standing director of Woori Asset Management. Previously, he served as a managing director of the strategy planning division and a senior general manager of the future strategy department of Bank. He holds a Bachelor of Arts in Business Administration fromChung-Ang University.
Kyu-Mok Hwang serves as a senior managing director of the public relation and brand unit as well as a deputy executive vice president of Woori Bank. Previously, he served as a managing director and the compliance officer and a senior general manager of the future strategy division of Woori Bank. He holds a Bachelor of Arts in Public Administration from Inha University and a Master of Arts in Public Administration from Yonsei ~~Graduate School~~University.
Seok-Young Chungserves as a senior managing director of ~~Public Administration.~~
~~Kyong-Hoon Park~~~~serves~~the risk management unit. Previously, he served as a managing director of the risk management unit and ~~head of Global business group. Prior to serving as managing director, he was the~~a senior general manager of the ~~corporate banking headquarters.~~future strategy division of Woori Bank. He holds a Bachelor of Arts in ~~International~~Business Administration and a Master of Arts in Economics from ~~Seoul National~~Yonsei University.
~~Jong-Deuk Kim~~Jong-Il Park serves as a managing director of the strategy planning division as well as anon-standing director of Woori Finance Research Institute. Previously, he served as a senior general manager of the strategy and planning department of Woori Bank and a senior general manager of the retail banking products and marketing department of Woori Bank. He holds a Bachelor of Laws from Hankuk University of Foreign Studies.
Sung-Wook Lee serves as a managing director of the finance planning division and anon-standing director of Woori Private Equity Asset Management. Previously, he served as a senior general manager of the finance and management department and a senior general manager of the future strategy division of Woori Bank. He holds a Bachelor of Arts in Business Administration from Yonsei University.
Gyu-Soon Hwang serves as a managing director of the global business unit as well as a managing director of Woori Bank. Previously, he served as a senior general manager of Gangnam regional banking headquarters II of Woori Bank. He holds a Bachelor of Arts in English from Hongik University.
Shin-Kook Kangserves as a managing director of the corporate and investment banking business division as well as a managing director of Woori Bank and a deputy president of Woori Investment Bank. Previously, he served as a senior general manager of the Jongno corporate banking headquarters of Woori Bank. He holds a Bachelor of Arts in Business Administration and a Masters of Arts in International Business from Korea University.
Byoung-Kwon Woo serves as a managing director and ~~head of~~ the ~~financial market business group.~~compliance officer. Previously, he served as a ~~managing director and head~~senior general manager of the ~~audit~~business support department and a senior general manager of the ~~head office business department.~~future strategy division of Woori Bank. He holds a Bachelor of Arts in ~~Regional Development Studies~~English Language and Literature from ~~Dankook~~Sungkyunkwan University.
None of the executive officers is involved in any significant business activities outside us and our subsidiaries.
Item 6.B.
Compensation
The aggregate remuneration andbenefits-in-kind we paid in ~~2017~~2019 to our directors and our other executive officers, including the compliance officer and managing directors, was ~~￦5,790 million. In 2017, we did not record additional~~￦2,451 million, which includes ￦223 million in provisions for allowances for severance and retirement benefits for such directors and officers. We do not have service contracts with any of these directors or officers that provide for benefits if employment with us is terminated.
The compensation of our director who received total annual compensation exceeding ￦500 million in ~~2017~~2019 was as follows:

Name
   Position    Total Compensation in ~~2017~~2019
(in millions of Won)⁽¹⁾
~~Kwang-Goo Lee~~Tae-Seung Son
   ~~Former~~ President and Chief Executive Officer    ￦ ~~936~~762 ⁽¹⁾

⁽¹⁾ ~~Includes severance payments.~~
Such compensation does not include a maximum 35,842 shares of our common stock that may be granted in connection with long-term performance from 2019 to 2022. The final number of shares granted will be determined at the time of payment based on the market price of our common stock and other factors.
In 2017, we did not grant any stock options and, accordingly, did not recognize any compensation expense for stock options granted under our stock option plan. As of the date of this annual report, we do not have any stock options outstanding.

Item 6.C.
Board Practices
See “Item 6.A. Directors and Senior Management—Board of Directors” and “Item 6.B. Compensation” for information concerning the terms of office and contractual employment arrangements with our directors and executive officers.
Committees of the Board of Directors
We currently have ~~five~~six committees that serve under the board:

the ~~Board of Directors Management~~Audit Committee;

the Board Risk Management Committee;

the ~~Audit~~Compensation Committee;

~~the Compensation Committee; and~~
the Committee for Recommending Executive Officer ~~Candidates.~~Candidates;
the Committee for Recommending Subsidiary Representative Director Candidates; and
the Committee for Internal Control Management.
The board appoints each member of these committees except for members of the Audit Committee, who are elected by our shareholders at the annual general meeting.
~~Board of Directors Management Committee~~
This committee consists of one standing director, one non-standing director and all five outside directors: Tae-Seung Sohn, Chang-Sik Bae, Dong-Woo Chang, Sang-Yong Park, Sung-Tae Ro, Sang-Hoon Shin and Zhiping Tian. The chairman is Sung-Tae Ro. This committee, which functions as a steering committee, provides administrative support for the operations of our board of directors. It is responsible for the following:
~~setting rules and procedures for operations of our board and its various committees;~~
~~addressing corporate governance issues; and~~
~~reviewing all reports to be submitted to the board and other matters that are deemed necessary by the board or various sub-committees of the board.~~
~~This committee holds regular meetings every quarter.~~
~~Board Risk Management Committee~~
This committee consists of one non-standing director and three outside directors: Chang-Sik Bae, Sang-Yong Park, Sung-Tae Ro and Zhiping Tian. The chairman is Sang-Yong Park. It oversees and makes determinations on all significant issues relating to our risk management system. It implements policies regarding, monitors and has ultimate responsibility for managing credit, market and liquidity risk and asset and liability management. The major roles of the Board Risk Management Committee include:
~~determining and amending risk management policies, guidelines and limits in conformity with the strategy established by the board of directors;~~
determining the appropriate level of risks that we should be willing to undertake, including in connection with key business activities such as acquisitions, investments or entering into new business areas, prior to a decision by the board of directors on such matters;
~~allocating risk capital and approving our business groups’ risk limit requests;~~
~~reviewing our risk profile, including the level of risks we are exposed to and the status of our risk management operations; and~~
~~monitoring our compliance with our risk policies.~~
The Board Risk Management Committee regularly receives reports from the Executive Risk Management Committee as well as the Risk Management Department, which in turn receives reports from subsidiary level risk management committees and groups. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” The committee holds regular meetings every quarter.
Audit Committee
This committee consists of ~~two~~three outside ~~directors~~directors:Sung-Tae Ro, Chan-Hyoung Chung and ~~one standing director:~~ Dong-Woo ~~Chang, Sang-Hoon Shin and Jung-Sik Oh.~~ Chang. The chairman is ~~Sang-Hoon Shin.~~Chan-Hyoung Chung. It reviews all audit and compliance-related matters and makes recommendations to our board. The Audit Committee, whose members must meet certain qualifications as experts under the committee charter, is also responsible for the following:

formulating, executing, evaluating and managing internal audit plans (including the financial and operational audits);

approving the appointment and dismissal of the head of the audit team;

approving the appointment of external auditors and evaluating the activities carried out by external auditors;

formulating appropriate measures to correct problems identified from internal audits;

overseeing ~~our~~the reporting systems within our financial holding company structure in light of relevant disclosure rules and requirements to ensure compliance with applicable regulations; and
examining internal procedures or making decisions on material matters that are related to audits as determined by the regulatory authorities, our board or other committees.
This committee also makes recommendations on regulatory issues to the Financial Supervisory Service, if and when deemed necessary. In addition, in connection with general meetings of shareholders, the committee examines the agenda for, and financial statements and other reports to be submitted by the board of directors, to each general meeting of shareholders. The internal and external auditors report directly to the Audit Committee chairman. Our external auditor is invited to attend meetings of this committee when needed or when matters pertaining to the audit are discussed. The subsidiary-level audit committees, which review subsidiary-level internal practices, report to the Audit Council that in turn reports to this committee.
~~The~~This committee holds regular meetings every quarter or as necessary.
Board Risk Management Committee
This committee consists of one standing director, onenon-standing director and three outside directors:Won-Duk Lee,Hong-Tae Kim, Sang-Yong Park, Dennis Chan and Zhiping Tian. The chairman is Sang-Yong Park. It oversees and makes determinations on all significant issues relating to our risk management system. It implements policies regarding, monitors and has ultimate responsibility for managing credit, market and liquidity risk and asset for liability management. The major roles of the Board Risk Management Committee include:
determining and amending risk management policies, guidelines and limits in conformity with the strategy established by the board of directors;
determining the appropriate level of risks that we should be willing to undertake, including in connection with key business activities such as acquisitions, investments or entering into new business areas, prior to a decision by the board of directors on such matters;
allocating risk capital and approving the risk limit requests of our subsidiaries;
reviewing our risk profile, including the level of risks we are exposed to and the status of our risk management operations; and
monitoring compliance with our risk policies.
This committee regularly receives reports from the Group Risk Management Council as well as the Group Risk Management Department, which in turn receives reports from subsidiary level risk management committees and groups. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” This committee holds regular meetings every quarter.
Compensation Committee
This committee consists of onenon-standing director and all ~~five~~six of our outside directors: ~~Chang-Sik Bae, Dong-Woo Chang,~~Hong-Tae Kim,Sung-Tae Ro, Sang-Yong Park, ~~Sung-Tae Ro, Sang-Hoon Shin~~Chan-Hyoung Chung, Dennis Chan, Zhiping Tian and ~~Zhiping Tian.~~Dong-Woo Chang. The chairman is ~~Sang-Hoon Shin.~~Chan-Hyoung Chung. It is responsible for all matters relating to the following:

evaluating management’s performance in developing our business;

setting goals and targets with respect to executive performance; and

fixing executive compensation, including incentives and bonuses.
This committee holds regular meetings every quarter.
Committee for Recommending Executive Officer Candidates
This committee consists of ~~one standing director and~~ all ~~five~~six of our outside directors: ~~Tae-Seung Sohn,~~ Dong-Woo Chang,Sung-Tae Ro, Sang-Yong Park, ~~Sung-Tae Ro, Sang-Hoon Shin~~Chan-Hyoung Chung, Dennis Chan and Zhiping Tian. The chairman isDong-Woo Chang. The committee oversees the selection of candidates for the president and chief executive officer, outside directors and Audit Committee members, among others. This committee holds meetings when ~~an Audit Committee member, an outside director or our president and chief executive officer needs~~such persons need to be appointed.

Committee for Recommending Subsidiary Representative Director Candidates

This committee consists of one standing director and all six of our outside directors:Tae-Seung Son ,Sung-Tae Ro, Sang-Yong Park, Chan-Hyoung Chung, Dennis Chan, Zhiping Tian andDong-Woo Chang. The chairman isTae-Seung Son. The committee oversees the selection of candidates for the representative directors of our subsidiaries. This committee holds meetings when such persons need to be appointed.

Committee for Internal Control Management

This committee consists of one standing director, onenon-standing director and one outside director:Tae-Seung Son,Hong-Tae Kim and Sang-Yong Park. The chairman is Sang-Yong Park. The committee oversees the operation of the internal control management systems of us and our subsidiaries through the inspection and review thereof. Through such process, the committee continues to develop new standards for effective control. This committee holds regular meetings every six months.

Item 6.D.

Employees

As of December 31, ~~2017,~~2019, we had a total of ~~13,637~~100 full-time employees at our financial holding company, excluding 30 employees ofthat hold concurrent positions at our subsidiaries. The following table sets forth information regarding our employees, on anon-consolidated basis and including employees holding concurrent positions at our subsidiaries, as of the dates indicated:

   As of December 31,
   2015    2016    2017
Full-time employees
   15,270    14,861    13,637
Contractual employees
   583    675    625






Total
   15,853    15,536    14,262






   As of December 31,
   2017⁽¹⁾    2018⁽¹⁾    2019
Woori Financial Group

Full-time employees
   —    —    130

Contractual employees
   —    —    36
Woori Bank

Full-time employees
   13,637    14,011    13,911

Contractual employees
   719    1,178    1,452
~~Approximately 70.9%~~
⁽¹⁾
Excludes part-time employees.
At the holding company level, our employees do not currently have a labor union and none of ~~our~~such employees are members of an outside labor union. Woori Bank has a labor union, and approximately 66.6% of its employees as of December 31, ~~2017~~2019 were members of the Korea Financial Industry Union. ~~We have not~~Neither we nor Woori Bank has experienced any significant labor disputes in recent years, although we have made certain concessions to our labor unions. See “Item 3.D. Risk Factors—Other risks relating to our business—Labor union unrest may disrupt our operations and hinder our ability to continue to reorganize our operations.” We have placed a high priority on our relationship with our employees and on maintaining an atmosphere of trust and cooperation between our labor and management.
~~Our salary system with respect to~~At the holding company level, our ~~employees is based on a combination of the agreed-upon~~employees’ compensation comprises an individual base salary and ~~bonuses reflecting~~bonus, which are determined based on the work productivity and performance of each employee and the relevant business ~~group.~~unit. We believe that the salaries we pay to our employees and management are similar to those of other large financial ~~institutions~~companies in Korea. We evaluate employees twice a year (usually in ~~January~~March and ~~July)~~September), based on our business performance and evaluations provided byco-workers and superiors. With respect to our compensation program, we do not provide housing leases or loans to our employees.
~~We operate~~At Woori Bank, employee compensation is generally based on a ~~“wage~~combination of the agreed-upon base salary and bonuses. In addition, Woori Bank operates a “salary peak” system, under which an employee’s ~~wages reach~~salary reaches a certain peak and then ~~are~~is gradually reduced as the employee reaches retirement age. Woori Bank’s bonus system is generally based on individual performance and business unit performance. We believe that Woori Bank’s compensation package is similar to that of institutions in the same industry. Woori Bank also provides a wide range of benefits to its employees, including medical insurance, employment insurance, workers compensation, accident insurance, financial aid for children’s tuition and retirement pension plans.
We have an employee stock ownership association, which purchases our shares at the request of our employees using their own ~~funds. We do not provide any compensation benefits to employees through such purchases, although~~funds and financial support by us depending on the amount of purchase by employee.

The association is entitled to certainpre-emptive rights. See “Item 10B. Memorandum and Articles ofAssociation—Pre-emptive Rights and Issuances of Additional Shares.”

We also provide a wide range of benefits to our employees, including medical insurance, employment insurance, workers compensation, life insurance, financial aid for children’s tuition and pension plans.

In accordance with the National Pension Act, we contribute an amount equal to 4.5% of employee wages, and each employee contributes 4.5% of his or her wages, into each employee’s personal pension account. In addition, in accordance with the Guarantee of Worker’s Retirement Benefits Act, we have adopted a retirement pension plan for our employees. Contributions under the retirement pension plan are deposited annually into a financial institution, and an employee may elect to receive a monthly pension or alump-sum amount upon retirement. Our retirement pension plans are provided in the form of a defined benefit plan and a defined contribution plan. The defined benefit plan guarantees a certain payout at retirement, according to a fixed formula based on the employee’s average ~~salary~~wages and the number of years for which the employee has been a plan member. The defined contribution plan, in which the employer’s contribution is determined in advance based onone-twelfth of an employee’s total annual pay, is managed directly by the employees. Under Korean law, we may not terminate the employment of full-time employees except under certain limited circumstances.

Item 6.E.

Share Ownership

Common Stock

As of April ~~20, 2018,~~ 23, 2020,the persons who are currently our directors or executive officers, in the aggregate, held ~~352,917~~190,613 shares of our common stock. None of these persons individually held more than 1% of our outstanding common stock as of such date. The following table presents information regarding our directors and executive officers who beneficially owned our shares as of April ~~20, 2018.~~23, 2020.


Name of Executive Officer or Director	Number of Shares of Common Stock
Tae-Seung ~~Sohn~~ Son		~~38,127~~55,296
~~Jung-Sik Oh~~Won-Duk Lee		18,500
Sung-Tae Ro		5,000
Sang-Yong Park		1,000
~~Sung-Tae Ro~~Chan-Hyoung Chung		~~5,000~~10,532
~~Sang-Hoon Shin~~		~~15,000~~
~~An-Ho Jang~~		~~5,380~~
~~Woon-Haeng Cho~~		~~27,345~~
~~Seong-Il~~Kyong-Hoon Park		~~15,914~~16,000
~~Sun-Kyu~~Dong-Su Choi		15,738
Jeong-Ki Kim		~~15,665~~
~~Yeong-Bae Kim~~		~~10,442~~
~~Jeong-Jin Heo~~		~~14,083~~
~~Dong-Yeon Lee~~		~~17,741~~
~~Hyun-Poong Hong~~		~~8,110~~
~~Chai-Pong Cheong~~		~~12,483~~
~~Chang-Jae Lee~~		~~15,938~~
~~Jeong-Ki Kim~~		~~26,477~~
~~Tae-Joong Ha~~		~~13,076~~
~~Jong-In Lee~~		~~13,046~~
~~Won-Duk Lee~~		2,000
~~Hong-Sik Choi~~		~~9,593~~
~~Su-Hyeong Cho~~		~~12,956~~
~~Hwa-Jae Park~~		~~17,523~~
Myung-Hyuk Shin		~~8,713~~3,000
~~Dong-Su Choi~~Jin-Ho Noh		~~10,738~~3,000
~~Jong-Suk Jeong~~Seok-Tae Lee		~~13,664~~14,857
~~Kyeong-Hun~~Kyu-Mok Hwang		13,239
Seok-Young Chung		18,951
Jongil Park		~~7,877~~2,000
~~Jong-Deuk Kim~~Sung-Wook Lee		~~10,026~~5,000
Gyu-Soon Hwang		2,000
Shin-Kook Kang		2,000
Byoung-Kwon Woo		2,500

Total		~~352,917~~190,613

Stock Options

As of the date of this annual report, we do not have any stock options outstanding.

Item 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Item 7.A.

Major Shareholders

The following table presents information regarding the beneficial ownership of our common stock at April ~~20, 2018~~23, 2020 (unless otherwise indicated) by each person or entity known to us to own beneficially more than 5% of the outstanding shares of our common stock.

Except as otherwise indicated, each shareholder identified by name has:

sole voting and investment power with respect to its shares; and

record and beneficial ownership with respect to its shares.


Beneficial Owner	Number of Shares of Common Stock		Percentage of Total Shares of Common Stock		Percentage of Total Shares on a Fully Diluted Basis		Number of Shares of Common Stock		Percentage of Total Shares of Common Stock⁽²⁾		Percentage of Total Shares on a Fully Diluted Basis⁽²⁾
KDIC		124,604,797		18.43		18.43		124,604,797		17.25		17.25
National Pension Service		62,809,267		9.29		9.29		62,341,705		8.63		8.63
Nobis1, Inc.⁽¹⁾		40,560,000		6.00		6.00		40,560,000		5.62		5.62

⁽¹⁾

Nobis1, Inc., which is an affiliate of IMM Private Equity, acquired 27,040,000 shares of ~~our~~Woori Bank’s common stock, or 4.00% of ~~our~~its outstanding common stock, in December 2016. In accordance with the Bank Act, Nobis1, Inc. received approval from the Financial Services Commission for the acquisition of an additional 13,520,000 shares of ~~our~~Woori Bank’s common stock, or 2.00% of ~~our~~its outstanding common stock, in January 2017, pursuant to an agreement not to exercise the voting rights with respect to such ~~shares.~~shares. Such shares were exchanged for shares of our common stock in January 2019 in the stock transfer.

⁽²⁾

As a result of Woori Bank’s disposal of the 42,103,377 shares of our common stock it acquired in connection with the “comprehensive stock exchange,” pursuant to which Woori Card became our direct and wholly-owned subsidiary, the number of our outstanding shares of common stock increased from 680,164,306 to 722,267,683. See “Item 4.A. History and Development of the Company—Establishment of Woori Financial Group—Reorganization and Expansion of Woori Financial Group.”

Pursuant to the Korean government’s privatization plan, in December 2014, the KDIC sold 40,143,022 shares of ~~our~~Woori Bank’s common stock (representing 5.9% of ~~our~~its outstanding common stock) in a private sale in Korea. In addition, in December 2016 and January 2017, the KDIC sold an aggregate of 200,685,395 shares of ~~our~~Woori Bank’s common stock (representing 29.7% of ~~our~~its outstanding common stock) in stakes ranging from 3.7% to 6.0% to seven financial companies through a bidding process. Pursuant to a commitment made by the KDIC in connection with such bidding process, five persons, each nominated by one of the winning bidders were ~~elected~~elcted as new outside directors at an extraordinary general meeting of ~~our~~Woori Bank’s shareholders held in December 2016. In December 2018, five persons, each nominated by one of such winning bidders, were elected at an extraordinary general meeting of Woori Bank’s shareholders to serve as our outside directors upon our establishment, and in March 2020, one person nominated by Fubon Life Insurance Co., Ltd., pursuant to a commitment made by Woori Bank in connection with its disposal of 42,103,377 shares of our common stock in September 2019, was elected at the annual general meeting of our shareholders to serve as our outside director. See “Item 6.A. Directors and Senior Management—Board of Directors—Outside Directors.” In 2017, pursuant to a series of transactions related to call options previously granted in connection with the KDIC’s sale of ~~our~~Woori Bank’s common stock in December 2014, the KDIC sold an aggregate of 19,852,364 shares of ~~our~~Woori Bank’s common stock (representing 2.94% of ~~our~~its outstanding common stock). As a result of such transactions, the KDIC’s ownership interest in usWoori Bank was reduced to 18.43%. ~~We expect~~In connection with our establishment in January 2019 as a new financial holding company pursuant to a “comprehensive stock transfer” under Korean law, the KDIC ~~to sell all or a portion of the remaining shares of~~received our common stock in exchange for the common stock of Woori Bank it owned and currently owns ~~to one or more purchasers~~17.25% of our outstanding common stock. We expect that the KDIC will sell all of such common stock in multiple transactions by 2022 in accordance with its plan that was approved by the ~~future.~~Financial Services Commission in June 2019.

As of April ~~20, 2018,~~23, 2020, our ~~president and~~ chief executive officer owned ~~38,127~~55,296 shares of our common stock. Our executive officers (excluding our ~~president and~~ chief executive officer) collectively owned ~~288,790~~118,785 shares of our common stock. Our outside directors collectively owned ~~26,000~~16,532 shares of our common stock.

Other than as set forth above, no other person or entity known by us to be acting in concert, directly or indirectly, jointly or separately, owned 5.0% or more of the outstanding shares of our common stock or exercised control or could exercise control over us as of April ~~20, 2018.~~23, 2020. None of our major shareholders has different voting rights from our other shareholders. However, pursuant to an agreement we entered into with the KDIC in ~~December 2016,~~July 2019, the KDIC has the right to require us to use our best efforts to cause an employee of the KDIC nominated by it to be appointed as ournon-standing director, so long as the KDIC either (x) owns 10% or more of our total issued shares with voting rights or (y) owns more than 4% but less than 10% of our total issued shares with voting rights and remains our largest shareholder (other than the National Pension Service of Korea). See “Item 10.C. Material Contracts.”

As of the close of our shareholders’ register on December 31, ~~2017,~~2019, approximately ~~72.8%~~69.5% of ~~our~~its issued shares were held in Korea by approximately ~~43,774~~44,992 shareholders.

Item 7.B.

Related Party Transactions

We regularly engage in transactions with entities affiliated with the government, which currently owns ~~18.43%~~17.25% of our shares through the KDIC. Generally, these transactions include the extension of loans, the purchase of debt securities and other ordinary course activities relating to our banking business. In addition, as of December 31, 2019, we owned ￦20 billion of debentures issued by the KDIC, representing 0.04% of our investment securities. For a description of such transactions, see “Item 4.B. Business Overview—Assets and Liabilities.” ~~In addition, as of December 31, 2017, we owned ￦30 billion of debentures issued by the KDIC, representing 0.1% of our investment securities.~~

As of December 31, ~~2017,~~2019, we also had loans outstanding to our executive officers and directors in the aggregate amount of ~~￦2,439~~￦2,414 million.

All of these loans were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present other unfavorable features.

None of our directors or officers has or had any interest in any transactions effected by us that are or were unusual in their nature or conditions or significant to our business which were effected during the current or immediately preceding year or were effected during an earlier year and remain in any respect outstanding or unperformed.

Item 7.C.

Interest of Experts and Counsel

Not Applicable

Item 8.

FINANCIAL INFORMATION

Item 8.A.

Consolidated Statements and Other Financial Information

See “Item 18. Financial Statements” and pagesF-1 through ~~F-126.~~F-175.

Legal Proceedings and Regulatory Actions

As a financial institution with diverse operations, we are subject to legal proceedings and regulatory actions in the ordinary course of our business.

Woori Bank

In August 2019, the Financial Supervisory Service commenced an investigation into past sales by Woori Bank and other banks in Korea of derivative-linked fund and securities products tied to yields on treasury bonds of Germany, the United Kingdom and the United States, which may have resulted in significant losses to certain customers who purchased such products. In December 2019, the dispute settlement committee of the Financial Supervisory Service recommended (i) the reimbursement of 40 to 80% of the related losses to certain customers by the banks involved in the sale of such products, including Woori Bank, and (ii) individual settlements with

other customers who were not subject to the 40 to 80% reimbursement recommendation. Accordingly, as of March 31, 2020, Woori Bank reimbursed 601 out of the 661 customers with relevant losses in 2019. In March 2020, the Financial Services Commission imposed on Woori Bank a fine of ￦19.7 billion and asix-month ban on sales of new private equity funds and confirmed the Financial Supervisory Service’s decision to impose a reprimand on our chief executive officer. Immediately following such decision, our chief executive officer, in his individual capacity, filed a request to nullify the reprimand as well as an injunction request to suspend the decision against him in the Seoul Administrative Court. On March 20, 2020, the injunction request was granted, and on March 26, 2020, such decision was appealed by the Financial Supervisory Service to the Seoul High Court, where the case is currently pending. There can be no assurance that such decisions by the Financial Services Commission and the Financial Supervisory Services (as well as any similar investigations by other government authorities, and private claims by customers, to which we may become subject) will not adversely affect our results of operations, cash flows and reputation. As of December 31, 2019, we recognized provisions with respect to such claims as part of our other provisions, which consist of provisions for litigation, loss compensation and others and totaled ￦172 billion. See Note23-(5)-2) of the notes to our consolidated financial statements included elsewhere in this annual report.

In February 2020, the Seoul Southern District Prosecutors’ Office commenced an investigation into the management of trade finance funds by Lime Asset Management Co. which may have resulted in significant losses to certain customers who purchased such products from banks and securities companies in Korea, including Woori Bank. Such trade finance funds of Lime Asset Management Co. had investments in certain funds managed by International Investment Group, which had its license revoked by the Securities and Exchange Commission in November 2018 for concealing losses and selling fraudulent loan assets, triggering suspension of the redemption of such trade finance funds. An investigation into the sellers of such trade finance funds, including Woori Bank, is expected to take place during the second quarter of 2020. While we intend to fully cooperate with any relevant investigations by government authorities, it is not possible to predict the final outcome of such investigations at this time. There can be no assurance that such investigations (as well as any private claims by customers, to which we may become subject) will not result in an unfavorable outcome, including the imposition of monetary damages, fines and other penalties against us, which, if significant, may adversely affect our results of operations, cash flows and reputation. As of December 31, 2019, we had not recognized any provisions with respect to such investigation, which had not occurred at such time.

In October 2019, the Financial Supervisory Service issued an institutional warning on Woori Bank for its failure to file with the Korea Financial Intelligence Unit (i) currency transaction reports for transactions in excess of ￦20 million conducted from December 18, 2017 to February 10, 2018 and May 8, 2018 to June 5, 2018 within the30-day deadline, which resulted from errors relating to our computer systems that failed to reveal the relevant transactions, and (ii) financial transaction reports relating to counterparties that are reasonably suspected to be engaged in money laundering or terrorism immediately for transactions conducted from January 2, 2017 to January 23, 2019. Woori Bank subsequently filed the relevant reports voluntarily.

In November 2017, the Seoul Northern District Prosecutors’ Office commenced an investigation into alleged business interference in ~~our~~Woori Bank’s hiring practices for new employees. According to the allegations made by the Seoul Northern District Prosecutors’ Office, certain of ~~our~~Woori Bank’s executive officers and other employees interfered with ~~our~~Woori Bank’s business by unfairly giving favorable treatment to ~~specific~~37 individuals in connection with their hiring from 2015 to 2017. While ~~the investigation is currently ongoing and, as of the date of this annual report,~~ there have been no formal charges or indictments against ~~us,~~Woori Bank, six of ~~our current~~its then-current and former employees were indicted in February 2018 in connection with such allegations. The ~~trial against such individuals is currently ongoing~~finalnon-appealable judgment of the Supreme Court of Korea sentenced one employee to imprisonment for eight months, imposed fines on four employees and acquitted one employee in ~~the Seoul Northern District Court.~~February 2020.

In March 2018, AJ Energy filed a lawsuit against usWoori Bank and Woori America Bank in the Supreme Court of the State of New York, which was removed to the United States District Court in the Southern District of New York, seeking to recover an alleged transfer to usWoori Bank from its foreign investors through an intermediary bank in the amount of EUR 8 billion. ~~The intermediary bank involved has informed us that it has no evidence of the alleged transfer, and we also have no records of such transfer and believe that the evidence presented by~~In June 2018, AJ Energy ~~is forged. We believe~~withdrew the lawsuit against Woori America Bank, and in September 2019, the district court granted Woori Bank’s motion to dismiss with prejudice in its entirety and ordered AJ Energy and its counsel to pay Woori Bank’s attorney’s fees and costs associated

with filing the motion. In October 2019, AJ Energy filed an appeal against the district court’s order to the United States Court of Appeals for the Second Circuit. Woori Bank believes that the lawsuit is without merit and ~~plan~~plans to continue to respond ~~proactively, including potentially through civil or criminal complaints against~~proactively. AJ Energy’s fraud in the ~~plaintiff. We expect~~case is also under investigation by the United States Attorney’s Office for the Central District of California. As of December 31, 2019, we had not recognized any provisions with respect to such lawsuit as our management concluded that the ~~court will dismiss~~payment of the ~~lawsuit in an expeditious manner.~~obligation is not probable.

Other than the legal proceedings discussed above, we and our subsidiaries are not a party to any legal or administrative proceedings, and no proceedings are known by us to be contemplated by governmental authorities or third parties, which, if adversely determined, may have a material adverse effect on our consolidated financial condition or results of operations.

Dividends

We declare our dividend annually at the annual general meeting of shareholders. We generally hold this meeting within three months after the end of each fiscal year. We must pay the annual dividend to the shareholders of record as of the end of the preceding fiscal year within one month after that meeting. We can distribute the annual dividend either in cash or in stock. Cash dividends may be paid out of retained earnings that have not been appropriated to statutory reserves. In addition, we may declare, and distribute in cash, interim dividends once a year pursuant to a board resolution.

The table below sets forth the dividend per share of common stock and the total amount of dividends declared by us in respect of the years ended December 31, ~~2015, 2016~~2017, 2018 and ~~2017.~~2019. Except as otherwise noted, the dividends set forth below with respect to each year were declared, paid and recorded in the following year.

Fiscal year
   Dividends Per
Share of Common Stock    Total Amount Of
Cash Dividends Paid
   (in Won)    (in millions of Won)
2015⁽¹⁾
   500    336,635
2016
   400    269,308
2017⁽²⁾
   600    403,963
Fiscal year
   Dividends Per
Share of Common Stock    Total Amount Of
Cash Dividends Paid
   (in Won)    (in millions of Won)
2017⁽¹⁾
   600    403,963
2018
   650    437,626
2019
   700    505,587

⁽¹⁾ ~~Includes interim dividends of ￦250 per share of common stock declared and paid in August 2015.~~
⁽²⁾
Includes interim dividends of ￦100 per share of common stock declared and paid in August 2017.
Future dividends will depend upon our revenues, cash flow, financial condition and other factors. As an owner of ADSs, you will be entitled to receive dividends payable in respect of the shares of common stock represented by such ADSs.
For a description of the tax consequences of dividends paid to our shareholders, see “Item 10.E. Taxation—United States Taxation—Dividends” and “—Korean Taxation—Taxation of Dividends on Common Shares or ADSs.”

Item 8.B.
Significant Changes
Not Applicable

Item 9.
THE OFFER AND LISTING

Item 9.A.
Offering and Listing Details
~~Market Price Information~~Principal Markets
The principal trading market for our common stock is the KRX KOSPI Market. Our common stock has been listed on the KRX KOSPI Market under the identifying code 316140 since February 13, 2019, and the ADSs have been listed on the New York Stock Exchange under the symbol “WF” since January 11, 2019. The ADSs are identified by the CUSIP number 981064108.
Woori Finance Holdings’ common stock was listed on the KRX KOSPI Market on June 24, 2002, and was suspended from trading from October 30, 2014 andde-listed on November 18, 2014 following the merger of

Woori Finance Holdings with us. Our common stock, which is in registered form and has a par value of ￦5,000 per share of common stock, was newly listed on the KRX KOSPI Market under the identifying code 000030 on November 19, 2014 following the merger. As of the date of this annual report, we have 673,271,226 shares of common stock outstanding.Woori Bank. Woori Finance Holdings’ ADSs were listed on the New York Stock Exchange ~~and identified by the symbol “WF”~~ since September 29, 2003 and were traded under the CUSIP number 981063100. Following the merger, weWoori Bank’s common stock was newly listed on the KRX KOSPI Market on November 19, 2014, and Woori Bank’s ADSs succeeded to the listing of Woori Finance Holdings’ ~~listing~~ADSs on the New York Stock ~~Exchange. Our~~Exchange on November 1, 2014. Woori Bank’s ADSs ~~are identified by the symbol “WF” and are~~were traded under the CUSIP number 98105T104.

~~The table below sets forth, for~~In connection with our establishment in January 2019 as a new financial company pursuant to a “comprehensive stock transfer” under Korean law, Woori Bank’s common stock was suspended from trading from January 9, 2019 and wasde-listed from the ~~periods indicated,~~KRX KOSPI Market on February 13, 2019. Following the ~~high and low closing prices and the average daily volume of trading activity~~stock transfer, our common stock was newly listed on the KRX KOSPI Market ~~for~~on February 13, 2019, and our orADSs succeeded to the listing of Woori ~~Finance Holdings’ common stock, as applicable, and the high and low closing prices and the average daily volume of trading activity~~Bank’s ADSs on the New York Stock Exchange ~~for our or Woori Finance Holdings’ ADSs, as applicable.~~

KRX KOSPI Market New York Stock Exchange⁽¹⁾
Closing Price Per
Common Stock Average Daily
Trading Volume Closing Price Per
ADS Average Daily
Trading Volume
High Low High Low
(in Won) (in thousands of shares) (in US$) (in shares)
2013
13,500 9,800 1,676 38.33 25.09 13,557
2014
14,550 10,000 1,785 42.41 27.05 4,936
2015
11,200 8,780 2,246 31.32 22.03 6,229
2016
13,350 8,230 1,698 35.70 20.25 6,570
First Quarter
9,510 8,230 1,481 24.98 20.25 3,550
Second Quarter
10,800 9,220 1,920 28.31 23.94 7,359
Third Quarter
11,800 9,430 1,691 32.22 24.34 8,106
Fourth Quarter
13,350 11,350 1,700 35.70 30.42 7,265
2017
19,550 12,300 1,631 53.50 31.18 10,268
First Quarter
13,850 12,300 1,217 37.25 31.18 4,550
Second Quarter
18,600 13,050 2,162 48.70 35.21 6,033
Third Quarter
19,550 17,050 1,640 53.50 44.49 14,494
Fourth Quarter
18,100 15,400 1,506 47.76 41.20 15,994
October
18,100 16,400 1,600 47.76 43.90 14,075
November
16,700 15,500 1,645 45.32 41.20 13,163
December
16,300 15,400 1,266 45.72 42.88 21,079
2018 (through April 20)
17,200 13,700 1,770 49.04 38.43 14,336
First Quarter
17,200 14,250 1,640 49.04 40.83 14,765
January
17,200 15,650 1,304 49.04 44.73 14,590
February
17,050 15,200 1,861 48.24 42.63 14,642
March
16,400 14,250 1,802 45.97 40.83 15,051
April (through April 20)
15,300 13,700 2,302 42.80 38.43 12,591
~~Source:~~ ~~KRX KOSPI Market; New York Stock Exchange.~~
⁽¹⁾ ~~Each ADS represents the right to receive three shares of our common stock.~~
~~Item 9.B.~~ ~~Plan of Distribution~~
~~Not Applicable~~
~~Item 9.C.~~ ~~Markets~~
The KRX KOSPI Market, formerly known as the Stock Market Division of the Korea Exchange, began its operations in 1956. It has a single trading floor located in Seoul. The KRX KOSPI Market is a membership organization consisting of most of the Korean financial investment companies with a dealing and/or brokerage license and some Korean branches of foreign financial investment companies with such license.on January 11, 2019.
As of ~~December 31, 2017,~~ the ~~aggregate market value~~date of equity securities listed on the KRX KOSPI Market was approximately ￦1,606 trillion. The average daily trading volume of equity securities for 2017 was approximately 340 million shares and the average daily transaction value was ￦5,326 billion.
~~The KRX KOSPI Market has the power in some circumstances to suspend trading in the~~this annual report, we have 722,267,681 shares of a given company or to de-list a security pursuant to the Listing Regulation of the KRX KOSPI Market. The KRX KOSPI Market also restricts share price movements. All listed companies are required to file accounting reports annually, semiannually and quarterly and to release immediately all information that may affect trading in a security.

The KRX KOSPI Market publishes the KOSPI, which is an index of all equity securities listed on the KRX KOSPI Market, every 10 seconds. The method of computing KOSPI is the aggregate value method, pursuant to which the market capitalizations of all listed companies are aggregated, subject to certain adjustments, and this aggregate is expressed as a percentage of the aggregate market capitalization of all listed companies as of the base date, January 4, 1980.

~~The following table sets out movements in KOSPI:~~

Year
   Opening    High    Low    Closing
1982
   123.60    134.48    105.99    128.99
1983
   122.52    134.46    115.59    121.21
1984
   115.25    142.46    115.25    142.46
1985
   139.53    163.37    131.40    163.37
1986
   161.40    279.67    153.85    272.61
1987
   264.82    525.11    264.82    525.11
1988
   532.04    922.56    527.89    907.20
1989
   919.61    1,007.77    844.75    909.72
1990
   908.59    928.82    566.27    696.11
1991
   679.75    763.10    586.51    610.92
1992
   624.23    691.48    459.07    678.44
1993
   697.41    874.10    605.93    866.18
1994
   879.32    1,138.75    855.37    1,027.37
1995
   1,013.57    1,016.77    847.09    882.94
1996
   888.85    986.84    651.22    651.22
1997
   653.79    792.29    350.68    376.31
1998
   385.49    579.86    280.00    562.46
1999
   587.57    1,028.07    498.42    1,028.07
2000
   1,059.04    1,059.04    500.60    504.62
2001
   520.95    704.50    468.76    693.70
2002
   724.95    937.61    584.04    627.55
2003
   635.17    822.16    515.24    810.71
2004
   821.26    936.06    719.59    895.92
2005
   893.71    1,379.37    870.84    1,379.37
2006
   1,389.27    1,464.70    1,203.86    1,434.46
2007
   1,435.26    2,064.85    1,355.79    1,897.13
2008
   1,853.45    1,888.88    938.75    1,124.47
2009
   1,157.40    1,718.88    1,018.81    1,682.77
2010
   1,696.14    2,051.00    1,552.79    2,051.00
2011
   2,070.08    2,228.96    1,652.71    1,825.74
2012
   1,826.37    2,049.28    1,769.31    1,997.05
2013
   2,031.10    2,059.58    1,780.63    2,011.34
2014
   1,967.19    2,082.61    1,886.85    1,915.59
2015
   1,926.44    2,173.41    1,829.81    1,961.31
2016
   1,918.76    2,068.72    1,835.28    2,026.46
2017
   2,026.16    2,557.97    2,026.16    2,467.49
2018 (through April 20)
   2,479.65    2,598.19    2,363.77    2,476.33
~~Source:~~ ~~The KRX KOSPI Market~~
Shares are quoted “ex-dividend” on the first trading day of the relevant company’s accounting period. Since the calendar year is the accounting period for the majority of listed companies, this may account for the drop in KOSPI between its closing level at the end of one calendar year and its opening level at the beginning of the following calendar year.

With certain exceptions, principally to take account of a share being quoted “ex-dividend” and “ex-rights,” permitted upward and downward movements in share prices of any category of shares on any day are limited under the rules of the KRX KOSPI Market to 30% of the previous day’s closing price of the shares, rounded down as set out below:


~~Previous Day’s Closing Price (Won)~~	~~Rounded~~ ~~Down To Won~~
~~Less than 1,000~~		1
~~1,000 to less than 5,000~~		5
~~5,000 to less than 10,000~~		10
~~10,000 to less than 50,000~~		50
~~50,000 to less than 100,000~~		~~100~~
~~100,000 to less than 500,000~~		~~500~~
~~500,000 or more~~		~~1,000~~

As a consequence, if a particular closing price is the same as the price set by the fluctuation limit, the closing price may not reflect the price at which persons would have been prepared, or would be prepared to continue, if so permitted, to buy and sell shares. Orders are executed on an auction system with priority rules to deal with competing bids and offers.

Due to deregulation of restrictions on brokerage commission rates, the brokerage commission rate on equity securities transactions may be determined by the parties, subject to commission schedules being filed with the KRX KOSPI Market by financial investment companies with a brokerage license. In addition, a securities transaction tax of 0.15% of the sales price will generally be imposed on the transfer of shares or certain securities representing rights to subscribe for shares. See “Item 3.D. Risk Factors—Risks relating to our common stock and ADSs.” An agriculture and fishery special surtax of 0.15% of the sales prices will also be imposed on transfer of these shares and securities on the KRX KOSPI Market. See “Item 10.E. Taxation—Korean Taxation.”outstanding.

The number of companies listed on the KRX KOSPI Market, the corresponding total market capitalization at the end of the periods indicated and the average daily trading volume for those periods are set forth in the following table:

Market Capitalization on the
Last Day of Each Period Average Daily Trading
Volume, Value
Year
Number of
Listed
Companies (billions of
￦) (thousands of
Shares) (millions of
￦)
1982
334 ￦ 3,001 9,704 ￦ 6,667
1983
328 3,490 9,325 5,941
1984
336 5,149 14,847 10,642
1985
342 6,570 18,925 12,315
1986
355 11,994 31,755 32,870
1987
389 26,172 20,353 70,185
1988
502 64,544 10,367 198,364
1989
626 95,477 11,757 280,967
1990
669 79,020 10,866 183,692
1991
686 73,118 14,022 214,263
1992
688 84,712 24,028 308,246
1993
693 112,665 35,130 574,048
1994
699 151,217 36,862 776,257
1995
721 141,151 26,130 487,762
1996
760 117,370 26,571 486,834
1997
776 70,989 41,525 555,759
1998
748 137,799 97,716 660,429
1999
725 349,504 278,551 3,481,620
2000
704 188,042 306,163 2,602,211
2001
689 255,850 473,241 1,997,420
2002
683 258,681 857,245 3,041,598
2003
684 355,363 542,010 2,216,636
2004
683 412,588 372,895 2,232,108
2005
702 655,075 467,629 3,157,662
2006
731 704,588 279,096 3,435,180
2007
745 951,900 363,741 5,539,653
2008
763 576,888 355,205 5,189,644
2009
770 887,935 485,657 5,795,426
2010
777 1,141,885 380,859 5,619,768
2011
791 1,041,999 353,759 6,863,146
2012
784 1,154,294 486,480 4,823,643
2013
777 1,185,974 328,325 3,993,422
2014
773 1,192,253 278,082 3,983,580
2015
770 1,242,832 455,256 5,351,734
2016
779 1,308,440 376,773 4,523,044
2017
774 1,605,821 340,457 5,325,760
2018 (through April 20)
777 1,653,176 403,020 7,089,807
~~Source:~~ ~~The KRX KOSPI Market~~
The Korean securities markets are principally regulated by the Financial Services Commission and the Financial Investment Services and Capital Markets Act. The Financial Investment Services and Capital Markets Act imposes restrictions on insider trading, price manipulation and deceptive action (including unfair trading), requires specified information to be made available by listed companies to investors and establishes rules

~~regarding margin trading, proxy solicitation, takeover bids, acquisition of treasury shares and reporting requirements for shareholders holding substantial interests.~~

~~Protection of Customer’s Interest in Case of Insolvency of Financial Investment Companies with a Brokerage License~~

Under Korean law, the relationship between a customer and a financial investment company with a brokerage license in connection with a securities sell or buy order is deemed to be consignment and the securities acquired by a consignment agent (i.e., the financial investment company with a brokerage license) through such sell or buy order are regarded as belonging to the customer in so far as the customer and the consignment agent’s creditors are concerned. Therefore, in the event of a bankruptcy or reorganization procedure involving a financial investment company with a brokerage license, the customer of such financial investment company is entitled to the proceeds of the securities sold by such financial investment company.

When a customer places a sell order with a financial investment company with a brokerage license which is not a member of the KRX KOSPI Market, and such financial investment company places a sell order with another financial investment company with a brokerage license, which is a member of the KRX KOSPI Market, the customer is still entitled to the proceeds of the securities sold and received by the non-member company from the member company regardless of the bankruptcy or reorganization of the non-member company.

Under the Financial Investment Services and Capital Markets Act, the KRX KOSPI Market is obliged to indemnify any loss or damage incurred by a counterparty as a result of a breach by its members. If a financial investment company with a brokerage license that is a member of the KRX KOSPI Market breaches its obligation in connection with a buy order, the KRX KOSPI Market is obliged to pay the purchase price on behalf of the breaching member. Therefore, the customer can acquire the securities that have been ordered to be purchased by the breaching member.

When a customer places a buy order with a non-member company and the non-member company places a buy order with a member company, the customer has the legal right to the securities received by the non-member company from the member company because the purchased securities are regarded as belonging to the customer in so far as the customer and the non-member company’s creditors are concerned.

As the cash deposited with a financial investment company with a brokerage license is regarded as belonging to such financial investment company, which is liable to return the same at the request of its customer, the customer cannot take back deposited cash from such financial investment company if a bankruptcy or reorganization procedure is instituted against such financial investment company and, therefore, can suffer from loss or damage as a result. However, the Depositor Protection Act provides that the KDIC will, upon the request of the investors, pay investors an amount equal to the full amount of cash deposited with a securities company prior to August 1, 1998 in case of the securities company’s bankruptcy, liquidation, cancellation of securities business license or other insolvency events. However, this indemnification was available only until the end of 2000. From 2001, the maximum amount to be paid to each customer is limited to ￦50 million. Pursuant to the Financial Investment Services and Capital Markets Act, as amended, financial investment companies with a dealing and/or brokerage license are required to deposit the cash received from its customers to the extent the amount is not covered by the insurance with the Korea Securities Finance Corporation, a special entity established pursuant to the Financial Investment Services and Capital Markets Act. Set-off or attachment of cash deposits by such financial investment companies is prohibited. The premiums related to this insurance are paid by such financial investment companies.

~~Reporting Requirements for Holders of Substantial Interests~~

Any person who directly or beneficially owns shares of our common stock that have voting rights, whether in the form of shares, ADSs, certificates representing the rights to subscribe for shares or equity-related debt securities (including convertible bonds and bonds with warrants) (which we refer to collectively as “Equity Securities”) that, when taken together with the Equity Securities beneficially owned by specified related persons or by any person acting in concert with that person, account for 5% or more of our total issued and outstanding

shares (plus the Equity Securities other than the shares held by such persons and treasury stock) must report that holding to the Financial Services Commission and the KRX KOSPI Market no more than five business days after reaching 5%. That person must also report any subsequent change in the ownership interest of 1% or more of our total outstanding shares (plus the Equity Securities other than the shares held by such persons) to the same entities no more than five business days after the change.

Anyone violating these reporting requirements may suffer criminal sanctions, including fines, imprisonment, an administrative fine of up to 0.001% of the aggregate market value of total issued and outstanding stock of ￦500 million, whichever is lower, and/or a loss of voting rights with respect to the ownership of Equity Securities exceeding 5% of the total issued and outstanding Equity Securities with respect to which the reporting requirements were violated. Furthermore, the Financial Services Commission may order that person to dispose of the unreported Equity Securities.

In addition to the reporting requirements described above, any person whose direct or beneficial ownership of our stock accounts for 10% or more of the total issued and outstanding stock (which we refer to as a “major shareholder”) must report the status of its shareholding to the Korea Securities Futures Commission and the KRX KOSPI Market within five days after becoming a major shareholder. In addition, the major shareholder must report any subsequent change in its ownership interest to those same entities within five days of the occurrence of the change, unless the change in the number of shares is less than 1,000 shares and the amount involved in such change is less than ￦10 million. A major shareholder that violates these reporting requirements may suffer criminal sanctions, including fines or imprisonment.

Restrictions Applicable to ADSs

An investor does not need Korean governmental approval to sell or purchase our ADSs in the secondary market outside Korea or to withdraw shares of our common stock from our ADS deposit facility or deliver those withdrawn shares in Korea. However, a foreign investor who intends to acquire shares must obtain an investment registration card from the Financial Supervisory Service as described below. Either the foreign investor or its standing proxy in Korea must immediately report its acquisition of the shares to the governor of the Financial Supervisory Service.

Persons who acquire shares of our common stock by withdrawing those shares from our ADS deposit facility may exercise their preemptive rights for new shares, participate in free distributions and receive dividends on shares without any further Korean governmental approval.

Restrictions Applicable to Shares

As a result of amendments to the Foreign Exchange Transaction Laws and Financial Services Commission regulations (which we refer to collectively as the “Investment Rules”) adopted since January 1992 in connection with the opening and operation of Korea’s stock market, foreign investors may generally invest, with limited exceptions and subject to procedural requirements, in all shares of Korean companies, whether listed on the KRX KOSPI Market or registered on the KRX KOSDAQ Market. Foreign investors may trade shares listed on the KRX KOSPI Market or registered on the KRX KOSDAQ Market only through the KRX KOSPI Market or the KRX KOSDAQ Market, except in limited circumstances. These circumstances include:

odd-lot share trading;

acquiring shares (which we refer to as “Converted Shares”) by exercising warrants, conversion rights or exchange rights under bonds with warrants, convertible bonds or exchangeable bonds or withdrawal rights under depositary receipts issued outside of Korea by a Korean company;

acquiring shares through inheritance, donation, bequest or exercise of shareholders’ rights, includingpre-emptive rights or rights to participate in free distributions and receive dividends;

subject to certain exceptions,over-the-counter transactions between foreign investors of a class of shares for which the limit on aggregate acquisition by foreign investors, as explained below, has been reached or exceeded; and

sale and purchase of shares at fair value between foreigners who are part of an investor group comprised of foreign companies investing under the control of a common investment manager pursuant to applicable laws or contract.

Forover-the-counter transactions between foreign investors outside the KRX KOSPI Market or the KRX KOSDAQ Market involving a class of shares for which the limit on aggregate acquisition by foreign investors has been reached or exceeded, a financial investment company with a brokerage license in Korea must act as an

intermediary.Odd-lot trading of shares outside the KRX KOSPI Market or the KRX KOSDAQ Market must involve a financial investment company with a dealing license in Korea as the other party. Foreign investors may not engage in margin transactions by borrowing shares from financial investment companies with a dealing and/or brokerage license with respect to shares that are subject to a foreign ownership limit.

The Investment Rules require a foreign investor who wishes to invest in shares on the KRX KOSPI Market or the KRX KOSDAQ Market (including Converted Shares and shares being issued for initial listing on the KRX KOSPI Market or registration on the KRX KOSDAQ Market) to register with the Financial Supervisory Service before making an investment. This registration requirement does not apply to foreign investors who acquire Converted Shares with the intention of selling the Converted Shares within three months from the acquisition date. The Financial Supervisory Service will issue an investment registration card to each registering foreign investor. This card must be presented each time the foreign investor opens a brokerage account with a financial investment company with a brokerage license. Foreign investors eligible to obtain an investment registration card include:

foreign nationals who have not been residing in Korea for a consecutive period of six months or more;

foreign governments;

foreign municipal authorities;

foreign public institutions;

international financial institutions or similar international organizations;

corporations incorporated under foreign laws; and

any person in any additional category designated under the Enforcement Decree of the Financial Investment Services and Capital Markets Act.

All Korean offices of a foreign corporation (as a group) are treated as a separate foreign investor from the offices of the corporation outside Korea for these purposes. However, a foreign corporation or depositary issuing depositary receipts may obtain one or more investment registration cards in its name in certain circumstances identified in the relevant regulations.

When a foreign investor purchases shares through the KRX KOSPI Market or the KRX KOSDAQ Market, it need not make a separate report because the investment registration card system is designed to control and oversee foreign investment through a computer system. If, however, a foreign investor acquires or sells shares outside the KRX KOSPI Market or the KRX KOSDAQ Market, that investor or its standing proxy must report that transaction to the governor of the Financial Supervisory Service at that time. In addition, if a foreign investor acquires or sells its shares in connection with a tender offer,odd-lot trading of shares or trades of a class of shares for which the aggregate foreign ownership limit has been reached or exceeded, that investor or its standing proxy must ensure that the financial investment company engaged to facilitate the transaction reports the transaction to the governor of the Financial Supervisory Service. Also, sale and purchase of shares at fair value between foreigners who are part of an investor group comprised of foreign companies investing under the common control of a common investment manager pursuant to applicable laws or contract are required to be reported to the governor of the Financial Supervisory Service. A foreign investor may appoint a standing proxy to exercise shareholders’ rights or perform any matters related to the foregoing activities if that investor does not perform these activities itself. A foreign investor may be exempted from complying with the standing proxy rules with the approval of the governor of the Financial Supervisory Service in cases deemed unavoidable by reason of conflict between laws of Korea and the home country of the foreign investor.

Certificates evidencing shares of Korean companies must be kept in the custody of an eligible custodian in Korea. The same entities eligible to act as a standing proxy are eligible to act as a custodian of shares for anon-resident or foreign investor. A foreign investor must ensure that its custodian deposits its shares with the Korea Securities Depository. A foreign investor may be exempted from complying with this deposit requirement with the approval of the governor of the Financial Supervisory Service in circumstances where compliance with

that requirement is made impracticable, including cases where compliance would contravene the laws of the foreign investors’ home country.

Under the Investment Rules, with certain limitations, foreign investors may acquire shares of a Korean company without being subject to any foreign investment limit. Under one of these limitations, foreign investors may acquire no more than 40% of the outstanding share capital of designated public corporations. In addition, designated public corporations may set a limit on the acquisition of shares by a single person in their articles of incorporation. If a foreign investor acquires 10% or more of the outstanding shares with voting rights of a Korean company, that investment constitutes a “foreign direct investment” under the Foreign Investment Promotion Act of Korea. Generally, a foreign direct investment must be reported to the Ministry of Trade, Industry and Energy of Korea. The acquisition of a Korean company’s shares by a foreign investor may be subject to certain foreign or other shareholding restrictions in the event that the restrictions are prescribed in a specific law that regulates the business of the Korean company. For a description of the restrictions applicable to Korean banks, see ~~“Item 4.B. Business Overview—Supervision and Regulation—~~“—Principal Regulations Applicable to Banks.”

Under the Foreign Exchange Transaction Laws, a foreign investor who intends to acquire shares must designate a foreign exchange bank at which he must open a foreign currency account and a Won account exclusively for stock investments. Approval is not required for remittance into Korea and deposit of foreign currency funds in the foreign currency account. Foreign currency funds may be transferred from the foreign currency account at the time required to place a deposit for, or settle the purchase price of, a stock purchase transaction to a Won account opened at a financial investment company with a dealing and/or brokerage license. Funds in the foreign currency account may be remitted abroad without any Korean governmental approval.

Dividends on shares of Korean companies are paid in Won. Korean governmental approval is not required for foreign investors to receive dividends on, or the Won proceeds from the sale of, any shares to be paid, received and retained in Korea. Dividends paid on, and the Won proceeds of the sale of, any shares held by anon-resident of Korea must be deposited either in a Won account with the investor’s financial investment company with a dealing and/or brokerage license or in its own Won account. Funds in a foreign investor’s Won account may be transferred to its foreign currency account or withdrawn for local living expenses up to certain limits. These funds may also be used to make future investments in shares or to pay the subscription price of new shares obtained through the exercise ofpre-emptive rights.

Financial investment companies with a dealing or brokerage license may open foreign currency accounts with foreign exchange banks exclusively to accommodate foreign investors’ stock investments in Korea. Through these accounts, financial investment companies with a dealing or brokerage license may enter into limited foreign exchange transactions, such as converting foreign currency funds and Won funds, either as a counterparty to or on behalf of foreign investors, without the investors having to open their own accounts with foreign exchange banks.

Item 9.B.

Plan of Distribution

Not Applicable

Item 9.C.

Markets

See “Item 9.A. Offering and Listing Details.”

Item 9.D.

Selling Shareholders

Not Applicable

Item 9.E.

Dilution

Not Applicable

Item 9.F.

Expenses of the Issuer

Not Applicable

Item 10.

ADDITIONAL INFORMATION

Item 10.A.

Share Capital

Not Applicable

Item 10.B.

Memorandum and Articles of Association

Description of Capital Stock

We have set forth below information relating to our capital stock, including brief summaries of some of the provisions of our articles of incorporation, the Korean Commercial Code, Financial Investment Services and Capital Markets Act, and other related laws of Korea. These summaries do not purport to be complete and are subject to our articles of incorporation, and the applicable provisions of the Financial Investment Services and Capital Markets Act, the Korean Commercial Code and those related laws.

Our authorized share capital is ~~5,000,000,000~~4,000,000,000 shares. Our articles of incorporation authorize us to issue:

shares of common stock, par value ￦5,000 per share;

“class shares,” par value ￦5,000 per share.

Subject to applicable laws and regulations, our articles of incorporation authorize us to issue a number of “class shares” equal to as much asone-half of all of the issued and outstanding shares.

As of the date of this annual report, ~~676,000,000~~722,267,683 shares of common stock were issued and ~~673,271,226~~722,267,681 shares of common stock were outstanding. Pursuant to our articles of incorporation, which ~~was last amended~~became effective upon our establishment on ~~March 24, 2017,~~January 11, 2019, we are authorized to issue various types of “class shares,” which include shares of voting andnon-voting preferred stock, convertible stock, redeemable preferred stock and hybrid securities comprising one or more elements of the foregoing types of shares. There are no class shares currently outstanding. All of the issued and outstanding shares are fully paid andnon-assessable and are in registered form. As of the date of this annual report, our authorized but unissued share capital was ~~4,324,000,000~~3,277,732,317 shares. We may issue the unissued shares without further shareholder approval, but these issuances are subject to a board resolution as provided in the articles of incorporation. See “—“—Pre-emptive Rights and Issuances of Additional Shares” and “—Dividends and Other Distributions—Distribution of Free Shares.” For a discussion of the history of our share capital, see Note 28 of the notes to our consolidated financial statements and “Item 4.A. History and Development of the Company—History—Establishment of Woori Finance Holdings,” “—Merger of Woori Bank and Woori Finance Holdings” and “—~~Privatization Plan—Merger with~~Establishment of Woori ~~Finance Holdings.~~Financial Group.”

Our articles of incorporation allow our shareholders, by special resolution, to grant to our officers, directors and employees stock options exercisable for up to 15% of the total number of our issued and outstanding shares. Our board of directors may also grant stock options exercisable for up to 1% of our issued and outstanding shares. However, any grant by our board of directors must be approved by our shareholders at their next general meeting convened immediately after the grant date. As of ~~December 31, 2017,~~the date of this annual report, our officers, directors and employees ~~did~~do not hold any options to purchase shares of common stock. See “Item 6.E. Share Ownership.”

~~We issue~~Our articles of incorporation reflect the adoption of the electronic securities system pursuant to the Act on Electronic Registration of Stocks, Bonds, Etc. Accordingly, in lieu of issuing share certificates, ~~in denominations~~we electronically register the rights to be indicated on our share certificates on the electronic registry of ~~one, five, ten, 50, 100, 500, 1,000 and 10,000 shares.~~the electronic registration agency.

Organization

We are a ~~bank~~financial holding company established under the ~~Bank~~Financial Holding Company Act. ~~We were originally established on January 30, 1899 and incorporated under the laws of Korea on June 19, 1911.~~ We are registered with the commercial registry office of Seoul District Court.

Interests of Directors

Our articles of incorporation provide that any director who has a material interest in the subject matter of a resolution to be taken by the board of directors cannot vote on such resolution. Our articles of incorporation also provide that the remuneration of our directors is to be determined by the resolution of the general meeting of shareholders.

Our articles of incorporation do not contain any special provisions with respect to the borrowing powers exercisable by directors, their retirement age or a requirement to hold any shares of our capital stock.

See “Item 6.C. Board Practices” for more information on our directors.

Limitation on Liability of Directors

Our articles of incorporation provide that we may, upon the resolution of the general meeting of shareholders, limit the liability of our directors (in their capacity as such) to an amount not less than six times (or three times in case of outside directors) the aggregate amount of the remuneration we paid to such directors during the most recentone-year period, provided that such limitation shall not apply with regard to any liability arising from such directors’ gross negligence, willful misconduct or violation of their duties regarding self-dealing or corporate opportunity.

Dividends and Other Distributions

Dividends. We distribute dividends to shareholders in proportion to the number of shares of the relevant class of capital stock they own. Subject to the requirements of the Korean Commercial Code and other applicable laws and regulations, we expect to pay full annual dividends on newly issued stock for the year in which it is issued.

We declare our dividend annually at the annual general meeting of shareholders. We generally hold this meeting within three months after the end of each fiscal year. We must pay the annual dividend to the shareholders of record as of the end of the preceding fiscal year within one month after that meeting. We can distribute the annual dividend in (i) cash, (ii) shares, provided that such shares must be distributed at par value and, if the market price of the shares is less than their par value, dividends in shares may not exceedone-half of the total annual dividend (including dividends in shares) or (iii) other forms of consideration. In addition, we may declare, and distribute in cash, interim dividends once a year pursuant to a board resolution.

Under the Korean Commercial Code and our articles of incorporation, we do not have an obligation to pay any annual or interim dividend unclaimed for five years from the payment date.

The Financial Holding Company Act and related regulations require that each time a Korean financial holding company pays an annual dividend, it must set aside in its legal reserve to stated capital an amount equal to at leastone-tenth of its net income after tax until the amount set aside reaches at least the aggregate amount of its stated capital. Unless it sets aside this amount, a Korean financial holding company may not pay an annual dividend. We intend to set aside allowances for loan losses and reserves for severance pay in addition to this legal reserve.

For information regarding taxation of dividends, see “Item 10.E. Taxation—United States Taxation—Dividends” and “—Korean Taxation—Taxation of Dividends on Common Shares or ADSs.”

Distribution of Free Shares. The Korean Commercial Code permits us to pay dividends in the form of shares out of retained or current earnings. It also permits us to distribute to our shareholders, in the form of free shares, an amount transferred from the capital surplus or legal reserve. We would be required to distribute those free shares pro rata to all shareholders.

Pre-emptive Rights and Issuances of Additional Shares

We may issue authorized but unissued shares as our board of directors may determine, unless otherwise provided in the Korean Commercial Code. We must, however, offer any new shares on uniform terms to all

shareholders who have preemptive rights and are listed on our shareholders’ register as of the applicable record date. Those shareholders are entitled to subscribe for any newly issued shares in proportion to their existing shareholdings. Our articles of incorporation provide, however, that we may issue new shares to persons other than existing shareholders if those shares are:

publicly offered pursuant to Article165-6 of the Financial Investment Services and Capital Markets Act (where the number of shares so offered may not exceed 50% of our total number of issued shares);

issued to directors or employees as a result of the exercise of stock options we granted to them pursuant to Article542-3 of the Korean Commercial Code;

issued to the members of our employee stock ownership association pursuant to Article165-7 of the Financial Investment Services and Capital Markets Act;

issued to specified foreign investors or foreign or domestic financial institutions for managerial needs, strategic technology alliances, emergency financing ordebt-to-equity swaps by those financial institutions (where the number of shares so offered may not exceed 50% of our total number of issued shares); or

issued to a depositary for the purpose of issuing depositary receipts pursuant to Financial Investment Services and Capital Markets Act (where the number of shares so offered may not exceed 50% of our total number of issued shares).

We must give public notice ofpre-emptive rights for new shares and their transferability not less than two weeks before the record date (excluding the period during which the shareholders’ register is closed). We will notify the shareholders who are entitled to subscribe for newly issued shares of the deadline for subscription at least two weeks prior to the deadline. If a shareholder fails to subscribe on or before the deadline, itspre-emptive rights will lapse. Our board of directors may determine how to distribute shares in respect of which preemptive rights have not been exercised or where fractions of shares occur.

Under the Financial Investment Services and Capital Markets Act, each member of our employee stock ownership association, whether or not they are shareholders, has a preemptive right, subject to certain exceptions, to subscribe for up to 20% of any shares we publicly offer. This right is exercisable only so long as the total number of shares so acquired and held by the member does not exceed 20% of the total number of shares then outstanding. As of December 31, ~~2017,~~2019, our employees owned ~~5.36%~~6.53% of our common stock through the employee stock ownership association.

In addition, our articles of incorporation permit us to issue convertible bonds or bonds with warrants, each up to an aggregate principal amount of ￦1 trillion, to persons other than existing ~~shareholders. Under~~shareholders.Under the Korean Commercial Code, we are permitted to distribute convertible bonds or bonds with warrants to persons other than existing shareholders only when we deem that this distribution is necessary for managerial purposes, such as obtaining new technology or improving our financial condition. In the event we issue new shares, the foregoing provision would be applicable notwithstanding any provision in the articles of incorporation allowing issuance of new shares to persons other than existing shareholders. In addition, pursuant to our articles of incorporation and the Act on Electronic Registration of Stocks, Bonds, Etc., in lieu of issuing certificates for bonds, share-related bonds (e.g., convertible bonds and bonds with warrants) and contingent capital securities, we electronically register rights to be indicated on such certificates on the electronic registry of the electronic registration agency. As of ~~December 31, 2017,~~the date of this annual report, we ~~had~~have no convertible bonds or bonds with warrants outstanding.

Voting Rights

Each outstanding share of our common stock is entitled to one vote per share. However, voting rights with respect to shares of common stock that we hold or any of our subsidiaries holds may not be exercised. Unless stated otherwise in a company’s articles of incorporation, the Korean Commercial Code permits holders of an aggregate of 1% or more of the issued and outstanding shares with voting rights to request cumulative voting when electing two or more directors. Our articles of incorporation do not prohibit cumulative voting.

The Korean Commercial Code and our articles of incorporation provide that an ordinary resolution may be adopted if approval is obtained from the holders of at least a majority of those shares of common stock present or represented at a meeting and such majority also represents at leastone-fourth of the total of our issued and outstanding voting shares. Holders ofnon-voting shares (other than enfranchisednon-voting shares) will not be entitled to vote on any resolution or to receive notice of any general meeting of shareholders, unless the agenda of the meeting ~~agenda~~ includes consideration of a resolution on which such holders are entitled to vote. The Korean Commercial Code provides that a company’s articles of incorporation may prescribe conditions for the enfranchisement ofnon-voting shares. For example, if our annual general shareholders’ meeting resolves not to pay to holders ofnon-voting shares with preferred dividend the annual dividend as determined by the board of directors at the time of issuance of such shares, the holders ofnon-voting shares with preferred dividend will be entitled to exercise voting rights from the general shareholders’ meeting following the meeting adopting such resolution to the end of a meeting to declare to pay such dividend with respect to thenon-voting shares with preferred dividend. Holders of such enfranchisednon-voting shares with preferred dividend will have the same rights as holders of common stock to request, receive notice of, attend and vote at a general meeting of shareholders.

The Korean Commercial Code provides that to amend the articles of incorporation, which is also required for any change to the authorized share capital of a company, and in certain other instances, including removal of a director of a company, dissolution, merger or consolidation of a company, transfer of the whole or a significant part of the business of a company, acquisition of all of the business of any other company, acquisition of a part of the business of any other company having a material effect on the business of the company or issuance of new shares at a price lower than their par value, a special resolution must be adopted by the approval of the holders of atleast two-thirds of those shares present or represented at a meeting ~~must approve the adoption of a special resolution,~~ and ~~the~~such special majority must represent atleast one-third of the total issued and outstanding shares with voting rights of the company. ~~Special resolutions are required to:~~

~~amend the articles of incorporation;~~

~~change the authorized share capital of the company;~~

~~remove a director;~~

~~dissolve, merge or consolidate us;~~

~~transfer of the whole or a significant part of our business;~~

~~acquire all of the business of another company;~~

~~acquire a part of the business of another company that has a material effect on our business of the company; and~~

~~issue new shares at a price lower than their par value.~~

In addition, in the case of amendments to the articles of incorporation or any merger or consolidation of a company or in certain other cases, where the rights or ~~interests~~interest of the holders of class shares are adversely affected, a resolution must be adopted by a separate meeting of holders of class shares. Such a resolution may be adopted if the approval is obtained from shareholders of at leasttwo-thirds of the class shares present or represented at such meeting and such shares also represent at leastone-third of the total issued and outstanding class shares.

A shareholder may exercise his voting rights by proxy given to another person. The proxy must present the power of attorney ~~before~~prior to the start of a meeting of shareholders.

Liquidation Rights

If we are liquidated, the assets remaining after the payment of all our debts, liquidation expenses and taxes will be distributed to the shareholders in proportion to the number of shares ~~they hold.~~held by them. Holders of class shares have no preferences in liquidation.

General Meetings of Shareholders

There are two types of general meetings of shareholders: (1) annual general meetings and (2) extraordinary general meetings. We are required to convene our annual general meeting within three months after the end of each fiscal year. Subject to a board resolution or court approval, an extraordinary general meeting of shareholders may be ~~held:~~

held when ~~we deem one necessary;~~

necessary or at the request of the holders of an aggregate of 3% or more of our outstanding ~~shares;~~

~~at the request of~~shares, or the holders of an aggregate of 0.75% or more of our outstanding ~~shares~~stock with voting rights, who have held those shares for at least six months, ~~pursuant to~~under the Act on the Corporate Governance of Financial ~~Institutions~~Companies andits sub-regulations.
Under the ~~regulations thereunder; or~~

Korean Commercial Code, an extraordinary general meeting of shareholders may also be convened at the request of our ~~Audit Committee.~~

audit committee, subject to a board resolution or court approval. Holdersof non-voting shares ~~are~~ may be entitled to request a general meeting of shareholders only ~~if their~~to the extentthe non-voting shares have become ~~enfranchised.~~enfranchised as described under the section entitled “—Voting Rights”

above, hereinafter referred to as“enfranchised non-voting shares.” Meeting agendas will be determined by ~~our~~the board of directors or proposed by holders of an aggregate of 3% or more of ~~our~~the outstanding shares with voting rights or by holders of an aggregate of ~~1.0%~~0.1% or more of ~~those~~our issued and outstanding shares with voting rights, who have held those shares for at least six months, by way of a written proposal to ~~our~~the board of directors at least six weeks ~~before~~prior to the meeting, ~~pursuant to~~under the Act on the Corporate Governance of Financial

~~Institutions~~ Companies and ~~the regulations thereunder. We must give shareholders written~~itssub-regulations. Written noticesor e-mail notices stating the date, place and agenda of the meeting must be given to the shareholders at least two weeks ~~before~~prior to the date of the ~~meeting. However, we~~general meeting of shareholders. Notice may, ~~give notice~~however, be given to holders of 1% or less of the total number of issued and outstanding shares ~~that~~which are entitled to vote, either by placing at least two public notices at least two weeks in advance of the meeting in at least two daily ~~newspapers.~~newspapers or by placing a notice through the electronic disclosure system operated by the Financial Supervisory Service or the Korea Exchange. Shareholders who are not on the shareholders’ register as of the record date will not be entitled to receive notice of the general meeting of shareholders, orand they will not be entitled to attend or vote at ~~the~~such meeting. ~~Unless their non-voting shares have been enfranchised, holders of non-voting shares are not entitled to receive notice of or vote at general meetings of shareholders.~~ Holders ofenfranchised non-voting shares who are on the shareholders’ register as of the record date will be entitled to receive notice of the general meeting of shareholders and they will be entitled to attend and vote at ~~the~~such meeting. Otherwise, holdersof non-voting shares will not be entitled to receive notice of or vote at general meetings of shareholders.

~~We will generally hold our~~The general meeting of shareholders will be held at our head office, which is our registered head ~~office. If~~office, or, if necessary, we may ~~hold the meeting~~be held anywhere in the vicinity of our head office.

Rights of Dissenting Shareholders

Pursuant to the Financial Investment Services and Capital Markets Act and the ~~Law~~Act on the Improvement of the Structure of the Financial Industry, in certain limited circumstances ~~dissenting holders of shares of our common stock and our class shares will have the right to require us to purchase their shares. These circumstances include:~~

(including, without limitation, if we transfer all or any significant part of our ~~business;~~

business, if we acquire a part of the business of any other company and ~~the~~such acquisition has a material effect on our ~~business;~~business, or

if we merge or consolidate with another ~~company.~~

company), dissenting holders of shares of our common stock and our stock with preferred dividends will have the right to require us to purchase their shares. To exercise ~~this~~such a right, shareholders must submit to us a written notice of their ~~intention to~~ dissent by the day prior to the general meeting of ~~shareholders called to approve the transaction in question.~~shareholders. Within 20 days ~~(or 10~~(10 days in the case of a ~~merger~~stock transfer or ~~consolidation~~exchange to establish a financial holding company or to own all issued shares of a subsidiary under the ~~Law on Improvement of the Structure of the~~ Financial ~~Industry)~~Holding Company Act) after the date on which ~~shareholders pass~~ the relevant resolution is passed at ~~the general~~such meeting, ~~the~~such dissenting shareholders must request in writing that we purchase their shares. We ~~must~~are obligated to purchase ~~those~~the shares from dissenting shareholders within one month after the end of ~~the~~such request period ~~(within two months after the receipt of the request in the case of a merger or consolidation under the Law on Improvement of the Structure of Financial Industry)~~ at a ~~negotiated price.~~price to be determined by negotiation between us and the shareholder. If we cannot agree on a price with the shareholder ~~on a purchase price~~ through such negotiations, the purchase price will be the arithmetic mean of (x) the weighted average of the ~~daily stock~~closing share prices on the KRX KOSPI Market ~~for:~~

forthe two-month period prior to the date of the adoption of the relevant board of directors’ resolution, ~~was adopted;~~

(y) the weighted average of the closing share prices on the KRX KOSPI Market forthe one-month period prior to the date of the adoption of the relevant board of directors’ resolution ~~was adopted;~~ and

(z) the weighted average of the closing share prices on the KRX KOSPI Market forthe one-week period prior to the date of the adoption of the relevant board of directors’ ~~resolution was adopted.~~

~~Pursuant~~resolution. However, any dissenting shareholder who wishes to ~~the Financial Investment Services and Capital Markets Act, if we or the dissenting shareholders do not accept~~contest the purchase price ~~either party~~ may bring a claim in court.

In the case of a merger or consolidation pursuant to the Law on the Improvement of the Structure of Financial Industry where the Korean government or the KDIC provides financial support, procedures different from those in the case of a merger or consolidation pursuant to the Financial Investment Services and Capital Markets Act will apply. For example, if the relevant parties cannot agree on a purchase price, the price will be determined by an accounting expert and not by the Financial Services Commission. However, a court may adjust this price if we or holders of at least 30% of the shares we must purchase do not accept the purchase price determined by the accounting expert and request an adjustment no later than 30 days from the date of the determination of the purchase price.

Required Disclosure of Ownership

~~Under Korean and U.S. law, shareholders~~Any person who directly or beneficially ~~hold more than a certain percentage~~owns shares of our common stock that have voting rights, whether in the form of shares, ADSs, certificates representing the rights to subscribe for shares or ~~who are~~equity-related debt securities (including convertible bonds and bonds with warrants) (which we refer to collectively as “Equity Securities”) that, when taken together with the Equity Securities beneficially owned by specified related topersons or ~~are~~by any person acting in concert with ~~other holders of certain percentages~~that person, account for 5% or more of our ~~common stock or our~~total issued and outstanding shares (plus the Equity Securities other ~~equity securities,~~than the shares held by such persons and treasury stock) must report ~~their holdings~~that holding to ~~various governmental authorities. For a description~~the Financial Services Commission and the KRX KOSPI Market no more than five business days after reaching 5%. That person must also report any subsequent change in the ownership interest of 1% or more of our total outstanding shares (plus the Equity Securities other than the shares held by such persons) to the same entities no more than five business days after the change.

Anyone violating these reporting requirements may suffer criminal sanctions, including fines, imprisonment, an administrative fine of up to 0.001% of the ~~required disclosure~~aggregate market value of total issued and outstanding stock of ￦500 million, whichever is lower, and/or a loss of voting rights with respect to the ownership ~~see “Item 9.C. Markets—Reporting Requirements~~of Equity Securities exceeding 5% of the total issued and outstanding Equity Securities with respect to which the reporting requirements were violated. Furthermore, the Financial Services Commission may order that person to dispose of the unreported Equity Securities.

In addition to the reporting requirements described above, any person whose direct or beneficial ownership of our stock accounts for ~~Holders~~10% or more of ~~Substantial Interests”~~the total issued and ~~“Item 4.B. Business Overview—Supervision~~outstanding stock (which we refer to as a “major shareholder”) must report the status of its shareholding to the Korea Securities Futures Commission and ~~Regulation—Principal Regulations Applicable~~the KRX KOSPI Market within five days after becoming a major shareholder. Also, the major shareholder must report any subsequent change in its ownership interest to ~~Banks—Restriction on Bank Ownership.”~~those same entities within five days of the occurrence of the change, unless the change in the number of shares is less than 1,000 shares and the amount involved in such change is less than ￦10 million. A major shareholder that violates these reporting requirements may suffer criminal sanctions, including fines or imprisonment.

Other Provisions

Record Date. The record date for annual dividends is December 31. For the purpose of determining the holders of shares entitled to annual dividends, ~~we may close~~ the register of ~~our~~ shareholders will be closed for the period beginning from January 1 ~~until~~and ending on January 31. Further, the Korean Commercial Code and our articles of incorporation permit us, upon at least two weeks’ public notice, to set a record date and/or close the register of shareholders for not more than three months for the purpose of determining the shareholders entitled to certain rights pertaining to the shares. However, in the event that the register of shareholders is closed for the period beginning from January 1 and ending on January 31 for the purpose of determining the holders of shares entitled to attend the annual general meeting of shareholders, the Korean Commercial Code waives the requirement to provide at least two weeks’ public notice. The trading of shares and the ~~related~~ delivery of ~~share~~ certificates in respect thereof may continue while the register of shareholders is closed.

Annual and Interim Reports. At least one week before the annual general meeting of shareholders, we must make our annual report and audited financial statements available for inspection at our head office and at all of our branch offices. ~~We must make copies~~Copies of ~~our annual reports, our~~this report, the audited financial statements and any resolutions adopted at the general meeting of shareholders are available to our shareholders.

Under the Financial Investment Services and Capital Markets Act, we must file with the Financial Services Commission and the KRX KOSPI ~~Market:~~

Market an annual business report within 90 days after the end of each fiscal ~~year;~~

year, a half-year business report within 45 days after the end of the first six months of each fiscal ~~year;~~year and

quarterly business reports within 45 days after the end of the first three months and nine months of each fiscal year.

Copies of ~~these~~such business reports will be available for public inspection at the Financial Services Commission and the KRX KOSPI Market.

Transfer of Shares. Under the Korean Commercial Code, ~~share transfers are~~the transfer of shares is effected by the delivery of share certificates. The Financial Investment Services and Capital Markets Act provides, however, that in case of a company listed on the KRX KOSPI Market ~~(like us),~~such as us, share transfers can be effected ~~using a~~by the book-entry ~~system. The~~method. In order to assert shareholders’ rights against us, the transferee must have ~~its~~his name and address registered on ~~our~~the register of ~~shareholders in order to assert its shareholder’s rights.~~shareholders. For this purpose, shareholders ~~must~~are required to file with us their name, address and ~~seal with us.~~seal. Non-resident shareholders must ~~tell~~notify us of the name of their proxy in Korea to which wenotices can ~~send notices.~~ be sent.

Under current Korean regulations, the ~~following entities may act as agents and provide related services for foreign shareholders:~~

~~the~~ Korea Securities ~~Depository;~~

Depository, internationally recognized foreign ~~custodians;~~

custodians, financial investment companies with a dealing license (including domestic branches of foreign financial investment companies with such license);

, financial investment companies with a brokerage license (including domestic branches of foreign financial investment companies with such license);

, foreign exchange banks (including domestic branches of foreign banks); and

financial investment companies with a collective investment license (including domestic branches of foreign financial investment companies with such license).

may act as agents and provide related services for foreign shareholders.

~~Foreign~~In addition, foreign shareholders may appoint a standing proxy ~~from~~among the foregoing and generally may not allow any person other than the standing proxy to exercise rights to the acquired shares or perform any tasks related thereto on their behalf.

~~Foreign~~ Certain foreign exchange controls and securities regulations apply to the transfer of sharesby non-residents or non-Koreans. See “Item ~~9.C. Markets.~~9.A. Offering and Listing Details” and “Item 10.D. Exchange Controls.”

Except as provided in the ~~Bank~~Financial Holding Company Act, the ~~maximum~~ceiling on the aggregate shareholdings of a single shareholder ~~or a person~~and persons who stand in a ~~“special relationship”~~special relationship with ~~any~~such shareholder is 10% of our issued and outstanding voting shares. See “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to ~~Banks—Restriction~~Financial Holding Companies—Restrictions on ~~Bank Ownership.~~Ownership of a Financial Holding Company.”

Our Acquisition of Our ~~Shares~~Shares. . Under the Korean Commercial Code, we may acquire ~~shares of~~ our own ~~capital stock under our name and for our own account~~shares upon a resolution of ~~the~~a general meeting of shareholders by either (i) purchasing ~~such shares~~them on ~~the applicable stock exchange with respect to marketable securities traded on such~~a stock exchange or (ii) purchasing a number of shares, other than ~~any~~ redeemable shares as ~~defined~~set forth in Article 345, Paragraph (1) of the Korean Commercial Code, from each shareholder in proportion to their existing shareholding ratio through the methods set forth in the ~~Enforcement~~Presidential Decree, ~~under Article 345, Paragraph (1) of the Korean Commercial Code,~~ provided that the total purchase price ~~may~~does not exceed the amount of our profit that may be distributed as dividends ~~for~~in respect of the immediately preceding fiscal year.

~~In addition,~~Additionally, pursuant to the Financial Investment Services and Capital Markets Act and regulations under the Financial Holding Company Act and after submission of certain reports to the Financial Services Commission, we may purchase our own ~~capital stock~~shares on the KRX KOSPI Market or through a tender ~~offer. We may also acquire interests in our capital stock through agreements with trust companies, securities investment companies or investment trust management companies. The~~offer, subject to the restrictions that (i) the aggregate purchase price of ~~our capital stock~~such shares may not exceed the total amount available for distribution of dividends at the end of the preceding fiscal ~~year.~~year; and (ii) the purchase of such shares shall meet the risk-weighted capital adequacy ratio requirements prescribed in the regulations under the Financial Holding Company Act based on Bank for International Settlements standards.

~~In general,~~Subject to certain limited exceptions, our subsidiaries ~~of which we own 50% or more are~~will not be permitted to acquire our ~~capital stock.~~shares pursuant to the Financial Holding Company Act.

Item 10.C.

Material Contracts

In connection with our receipt of public funds, we entered into a memorandum of understanding with the KDIC, which was terminated in December 2016. See “Item 4.A. History and Development of the Company—History—Memoranda of Understanding.”

~~In December 2016,~~July 2019, in connection with the KDIC’s ~~sale~~ownership of shares of our common stock, we entered into an agreement with the KDIC, which we refer to as the KDIC Agreement. Pursuant to the KDIC Agreement, we are required to use our best efforts to cause an employee of the KDIC nominated by it to be appointed as ~~one~~anon-standing director of ~~our non-standing directors,~~each of us and Woori Bank, so long as the KDIC either (x) owns 10% or more of our total issued shares with voting rights or (y) owns more than 4% but less than 10% of our total issued shares with voting rights and remains our largest shareholder (other than the National Pension Service of Korea). In addition, pursuant to the KDIC Agreement, we are required to use our best efforts to cause suchnon-standing director nominated by the KDIC to be appointed as a member of the Compensation Committee under ~~our~~each of the board of directors of us and Woori Bank, so long as the KDIC owns 10% or more of our total issued shares with voting rights. Furthermore, so long as the KDIC owns 4% or more of our total issued shares with voting rights, the KDIC Agreement requires us to provide certain information in advance to the KDIC, including the agenda and minutes for meetings of our board of directors, information regarding our retained earnings available for distribution of dividends, and information regarding matters that ~~may~~could have a material effect on the KDIC’s remaining share ownership interest in us, such as capital increases or decreases, ~~our conversion to a holding company structure,~~ changes in our corporate governance, changes in the lines of business of our subsidiaries and material dispositions or acquisitions of assets. The KDIC Agreement provides that it will automatically terminate if the KDIC ceases to own 4% or more of our total issued shares with voting rights.

Item 10.D.

Exchange Controls

General

The Foreign Exchange Transaction Act of Korea and the Enforcement Decree and regulations under that Act regulate investment in Korean securities bynon-residents and issuance of securities outside Korea by Korean companies. We collectively refer to these laws and regulations as the “Foreign Exchange Transaction Laws.”

Non-residents may invest in Korean securities only to the extent specifically allowed by the Foreign Exchange Transaction Laws or otherwise permitted by the Ministry of ~~Strategy~~Economy and Finance. The Financial Services Commission has also adopted regulations that restrict foreign investment in Korean securities and regulate the issuance of securities outside Korea by Korean companies, pursuant to its authority under the Financial Investment Services and Capital Markets Act.

Under the Foreign Exchange Transaction Laws, if the Korean government deems that:

the need to do so is inevitable due to the outbreak of natural calamities, wars, conflict of arms or grave and sudden changes in domestic or foreign economic circumstances or other similar situations, the Ministry of ~~Strategy~~Economy and Finance may temporarily suspend payment, receipt or the whole or part of transactions to which the Foreign Exchange Transaction Laws apply, or impose an obligation to safe-keep, deposit or sell means of payment in or to certain Korean governmental agencies or financial institutions; and

international balance of payments and international finance are confronted or are likely to be confronted with serious difficulty or the movement of capital between Korea and abroad brings or is likely to bring about serious obstacles in carrying out its currency policies, exchange rate policies and other macroeconomic policies, the Ministry of ~~Strategy~~Economy and Finance may take measures to require any person who intends to perform capital transactions to obtain permission or to require any person who performs capital transactions to deposit part of the payments received in these transactions at certain Korean governmental agencies or financial institutions.

Both of these actions are subject to limitations specified by the Foreign Exchange Transaction Laws.

Restrictions Applicable to Shares

Under the Foreign Exchange Transaction Laws, a foreign investor who intends to acquire shares must designate a foreign exchange bank at which he or she must open a foreign currency account and a Won account exclusively for stock investments. Approval is not required for remittance into Korea and deposit of foreign currency funds in the foreign currency account. Foreign currency funds may be transferred from the foreign currency account at the time required to place a deposit for, or settle the purchase price of, a stock purchase transaction to a Won account opened at a financial investment company with a dealing and/or brokerage license. Funds in the foreign currency account may be remitted abroad without any Korean governmental approval.

Financial investment companies with a dealing and/or brokerage license may open foreign currency accounts with foreign exchange banks exclusively to accommodate foreign investors’ stock investments in Korea. Through these accounts, such financial investment companies may enter into limited foreign exchange transactions, such as converting foreign currency funds and Won funds, either as a counterparty to or on behalf of foreign investors, without the investors having to open their own accounts with foreign exchange banks.

Item 10.E.

Taxation

The following summary is based upon tax laws, regulations, rulings, decrees, income tax conventions (treaties), administrative practice and judicial decisions of Korea and the United States as of the date of this annual report, and is subject to any change in the laws of Korea or the United States that may come into effect after such date.

United States Taxation

This summary describes certain material U.S. federal income tax consequences for a U.S. holder (as defined below) of acquiring, owning, and disposing of common shares or ADSs. This summary applies to you only if you hold the common shares or ADSs as capital assets for tax purposes. This summary does not apply to you if you are a member of a class of holders subject to special rules, such as:

a dealer in securities or currencies;

a trader in securities that elects to use amark-to-market method of accounting for securities holdings;

a bank or financial institution;

a life insurance company;

atax-exempt organization;

an entity treated as a partnership or other passthrough entity (or investors therein) for U.S. federal income tax purposes;

a person that holds common shares or ADSs that are a hedge or that are hedged against interest rate or currency risks;

a person that holds common shares or ADSs as part of a straddle or conversion transaction for tax purposes;

a person whose functional currency for tax purposes is not the U.S. dollar; or

a person that owns or is deemed to own 10% or more of our stock, measured by voting power or value.

In addition, this summary does not discuss the application of the U.S. federal estate and gift taxes, the Medicare net investment income tax or the alternative minimum tax, or any state, local or other tax consequences of purchasing, owning, and disposing of common shares or ADSs. You should consult your own tax advisers concerning the U.S. federal, state, local, and other tax consequences of purchasing, owning, and disposing of common shares or ADSs in your particular circumstances.

This summary is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations promulgated thereunder, and published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis.

For purposes of this summary, you are a “U.S. holder” if you are the beneficial owner of a common share or an ADS and are:

a citizen or resident of the United States;

a U.S. domestic corporation; or

otherwise subject to U.S. federal income tax on a net income basis with respect to income from the common share or ADS.

In general, if you are the beneficial owner of ADSs, you will be treated as the beneficial owner of the common shares represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if you exchange an ADS for the common share represented by that ADS.

Dividends

The gross amount of cash dividends that you receive (prior to deduction of Korean taxes) generally will be subject to U.S. federal income taxation as foreign source dividend income and will not be eligible for the dividends received deduction. Dividends paid in Won will be included in your income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date that you receive the dividend (or the depositary receives the dividend, in the case of ADSs), regardless of whether the payment is in fact converted into U.S. dollars. If such a dividend is converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend income.

Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received by an individual with respect to ~~the~~our common shares or ADSs will be subject to taxation at reduced rates if the dividends are “qualified dividends.” Dividends paid on the common shares or ADSs will be treated as qualified dividends if (i) the common shares or ADSs are readily tradable on an established securities market in the United States or we are eligible for the benefits of a comprehensive tax treaty with the United States that the U.S. Treasury determines is satisfactory for purposes of this provision and that includes an exchange of information program; and (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company as defined for U.S. federal income tax purposes, which we refer to as a PFIC. The ADSs are listed on the New York Stock Exchange, and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. In addition, the U.S. Treasury has determined that the Korea-United States income tax treaty meets the requirements for reduced rates of taxation, and we believe we are eligible for the benefits of that treaty. Based on our audited financial statements, we believe that we were not a PFIC in our ~~2017~~2018 and 2019 taxable ~~year.~~years. In addition, based on our current expectations regarding our income, assets and activities, we do not anticipate becoming a PFIC for our ~~2018~~2020 taxable year. Therefore, we believe that dividends received by U.S. holders with respect to either common shares or ADSs will be “qualified dividends.” Holders should consult their own tax advisers regarding the availability of the reduced dividend tax rate in light of their own particular circumstances.

Distributions of additional shares in respect of common shares or ADSs that are made as part of apro-rata distribution to all of our shareholders generally will not be subject to U.S. federal income tax.

Sale or Other Disposition

For U.S. federal income tax purposes, gain or loss you realize on a sale or other disposition of common shares or ADSs generally will be treated as U.S. source capital gain or loss, and will be long-term capital gain or loss if the common shares or ADSs were held for more than one year. Your ability to offset capital losses against ordinary income is limited. Long-term capital gain recognized by an individual U.S. holder generally is subject to taxation at reduced rates.

If a U.S. holder sells or otherwise disposes of our common shares or ADSs in exchange for currency other than U.S. dollars, the amount realized generally will be the U.S. dollar value of the currency received at the spot rate on the date of sale or other disposition (or, if the shares are traded on an established securities market at such time, in the case of cash basis and electing accrual basis U.S. holders, the settlement date). An accrual basis U.S. holder that does not elect to determine the amount realized using the spot exchange rate on the settlement date will recognize foreign currency gain or loss equal to the difference between the U.S. dollar value of the amount received based on the spot exchange rates in effect on the date of the sale or other disposition and the settlement date. If an accrual basis U.S. holder makes the election described in the first sentence of this paragraph, it must be applied consistently from year to year and cannot be revoked without the consent of the Internal Revenue ~~Service.~~Service , or the IRS. A U.S. holder should consult its own tax advisors regarding the treatment of any foreign currency gain or loss realized with respect to any currency received in a sale or other disposition of the common shares or ADSs.

Foreign Tax Credit Considerations

You should consult your own tax advisers to determine whether you are subject to any special rules that limit your ability to make effective use of foreign tax credits. If no such rules apply, you may claim a credit

against your U.S. federal income tax liability for Korean taxes withheld from dividends on the common shares or ADSs at the rate provided for under the income tax treaty between the United States and Korea, so long as you have owned the common shares or ADSs (and not entered into specified kinds of hedging transactions) for at least a16-day period that includes theex-dividend date. Instead of claiming a credit, you may, if you so elect, deduct such Korean taxes in computing your taxable income, subject to generally applicable limitations under U.S. tax law. Korean taxes withheld from a distribution of additional shares that is not subject to U.S. tax may be treated for U.S. federal income tax purposes as imposed on ~~“general category”~~“foreign branch” category income. Such treatment could affect your ability to utilize any available foreign tax credit in respect of such taxes.

Any Korean securities transaction tax or agriculture and fishery special surtax that you pay will not be creditable for foreign tax credit purposes.

Similarly, a U.S. holder will not be able to claim a foreign tax credit against its U.S. federal income tax liability for any Korean inheritance or gift tax imposed in respect of the common shares or ADSs.

Foreign tax credits will not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions in securities and may not be allowed in respect of arrangements in which a U.S. holder’s expected economic profit is insubstantial.

The calculation of foreign tax credits and, in the case of a U.S. holder that elects to deduct foreign taxes, the availability of deductions involve the application of complex rules that depend on a U.S. holder’s particular circumstances. You should consult your own tax advisers regarding the creditability or deductibility of such taxes.

Specified Foreign Financial Assets

Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 ~~U.S. dollars~~on the last day of the taxable year or US$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at anon-U.S. financial institution, as well as securities issued by anon-U.S. issuer (which would include the common shares and ADSs) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors should consult their own tax advisors concerning the application of these rules to their investment in the common shares or ADSs, including the application of the rules to their particular circumstances.

U.S. Information Reporting and Backup Withholding Rules

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding unless the holder (i) is a corporation or other exempt recipient and demonstrates this when required or (ii) provides a taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. Holders that are not U.S. persons generally are not subject to information reporting or backup withholding. However, such a holder may be required to provide a certification of itsnon-U.S. status in connection with payments received within the United States or through a U.S.-related financial intermediary.

Korean Taxation

The following summary of Korean tax considerations applies to you so long as you are not:

a resident of Korea;

a corporation with its head office, principal place of business or place of effective management in Korea; or

engaged in a trade or business in Korea through a permanent establishment or a fixed base to which the relevant income is attributable or with which the relevant income is effectively connected.

Please consult your own tax advisers as to the Korean, state, local and other tax consequences of the purchase, ownership and disposition of common shares.

Taxation of Dividends on Common Shares or ADSs

We will deduct Korean withholding tax from dividends paid to you (whether payable in cash or in shares) at a rate of 22.0% (inclusive of local income surtax). If you are a qualified resident and a beneficial owner of the dividends in a country that has entered into a tax treaty with Korea, you may qualify for a reduced rate of Korean withholding tax. See “—Tax Treaties” below for a discussion on treaty benefits. If we distribute to you free shares representing a transfer of earning surplus or certain capital reserves intopaid-in capital, that distribution may be subject to Korean withholding tax.

Taxation of Capital Gains from Transfer of Common Shares or ADSs

As a general rule, capital gains earned bynon-residents upon transfer of our common shares or ADSs are subject to Korean withholding tax at the lower of (1) 11.0% (inclusive of local income surtax) of the gross proceeds realized or (2) subject to the production of satisfactory evidence of acquisition costs and certain direct transaction costs of the common shares or ADSs, 22.0% (inclusive of local income surtax) of the net realized gain, unless exempt from Korean income taxation under the applicable Korean tax treaty with thenon-resident’s country of tax residence. See “—Tax Treaties” below for a discussion on treaty benefits. Even if you do not qualify for an exemption under a tax treaty, you will not be subject to the foregoing withholding tax on capital gains if you qualify under the relevant Korean domestic tax law exemptions discussed in the following paragraphs.

In regard to the transfer of our common shares through the Korea Exchange, you will not be subject to the withholding tax on capital gains (as described in the preceding paragraph) if you (1) have no permanent establishment in Korea and (2) did not own or have not owned (together with any shares owned by any person with which you have a certain special relationship) 25% or more of the total issued and outstanding shares, which may include the common shares represented by the ADSs, at any time during the calendar year in which the sale occurs and during the five consecutive calendar years prior to the calendar year in which the sale occurs.

Under Korean tax law, ADSs are viewed as shares of common stock for capital gains tax purposes. Accordingly, capital gains from the sale or disposition of ADSs are taxed (if such sale or disposition constitutes a taxable event) as if such gains are from the sale or disposition of the underlying common shares. Capital gains that you earn (regardless of whether you have a permanent establishment in Korea) from a transfer of ADSs outside of Korea will generally be exempt from Korean income taxation by virtue of the Special Tax Treatment Control Law of Korea, or the STTCL, provided that the issuance of the ADSs is deemed to be an overseas issuance under the STTCL. However, if you transfer ADSs after having converted the underlying common shares, such exemption under the STTCL will not apply and you will be required to file a corporate income tax return and pay tax in Korea with respect to any capital gains derived from such transfer unless the purchaser or a financial investment company with a brokerage license, as applicable, withholds and pays such tax.

If you are subject to tax on capital gains with respect to the sale of ADSs, or of our common shares you acquired as a result of a withdrawal, the purchaser or, in the case of the sale of the common shares on the Korea Exchange or through a financial investment company with a brokerage license in Korea, such financial investment company, is required to withhold Korean tax on capital gain from the sales price in an amount equal to the lower of (1) 11.0% (inclusive of local income surtax) of the gross realization proceeds or (2) subject to the production of satisfactory evidence of acquisition costs and certain direct transaction costs of the common shares or ADSs, 22.0% (inclusive of local income surtax) of the net realized gain, and to make payment of these amounts to the Korean tax authority, unless you establish your entitlement to an exemption under an applicable tax treaty or domestic tax law. See “—Tax Treaties” below for a discussion on claiming treaty benefits.

Tax Treaties

Korea has entered into a number of income tax treaties with other countries (including the United States), which would reduce or exempt Korean withholding tax on dividends on, and capital gains on transfer of, the common shares or ADSs. For example, under the Korea-United States income tax treaty, reduced rates of Korean

withholding tax of 16.5% or 11.0% (depending on your shareholding ratio and inclusive of local income surtax) on dividends and an exemption from Korean withholding tax on capital gains are available to residents of the United States that are beneficial owners of the relevant dividend income or capital gains, subject to certain exceptions. However, under Article 17 (Investment or Holding Companies) of the Korea-United States income tax treaty, such reduced rates and exemption do not apply if (i) you are a United States corporation, (ii) by reason of any special measures, the tax imposed on you by the United States with respect to such dividend income or capital gains is substantially less than the tax generally imposed by the United States on corporate profits and (iii) 25% or more of your capital is held of record or is otherwise determined, after consultation between competent authorities of the United States and Korea, to be owned directly or indirectly by one or more persons who are not individual residents of the United States. Also, under Article 16 (Capital Gains) of the Korea-United States income tax treaty, the exemption on capital gains does not apply if (a) you have a permanent establishment in Korea and any shares of common stock in which you hold an interest and which give rise to capital gains are effectively connected to such permanent establishment, (b) you are an individual and you maintain a fixed base in Korea for an aggregate of 183 days or more during a given taxable year and your ADSs or common shares giving rise to capital gains are effectively connected with such fixed base or (c) you are an individual and you are present in Korea for an aggregate of 183 days or more during a given taxable year.

You should inquire for yourself whether you are entitled to the benefit of a tax treaty between Korea and the country where you are a resident. It is the responsibility of the party claiming the benefits of an income tax treaty in respect of dividend payments or capital gains to submit to us, the purchaser or the financial investment company, as applicable, a certificate as to his tax residence. In the absence of sufficient proof, we, the purchaser or the financial investment company, as applicable, must withhold tax at the normal rates. Furthermore, in order for you to claim the benefit of a tax rate reduction or tax exemption on certain Korean source income (such as dividends or capital gains) under an applicable tax treaty, Korean tax law requires you (or your agent) to submit an application (for a reduced withholding tax rate, the “application for entitlement to a reduced tax rate,” and in the case of exemptions from withholding tax, the “application for tax exemption” along with a certificate of your tax residency issued by a competent authority of your country of tax residence, subject to certain exceptions) as the beneficial owner of such Korean source income, or a BO application. For example, a U.S. resident would be required to provide a Form 6166 as a certificate of tax residency together with the application for entitlement to reduced tax rate or the application for tax exemption. Such application should be submitted to the withholding agent prior to the payment date of the relevant income. Subject to certain exceptions, where the relevant income is paid to an overseas investment vehicle (which is not the beneficial owner of such income), or an OIV, a beneficial owner claiming the benefit of an applicable tax treaty with respect to such income must submit its BO application to such OIV, which must submit an OIV report and a schedule of beneficial owners (as well as the BO applications collected from each beneficial owner, if such beneficial owner is applying for a tax exemption) to the withholding agent prior to the payment date of such income. Effective January 1, 2020, an OIV that was not established for the purpose of unjustifiably reducing income tax liabilities in Korea and bears tax liabilities in the country of its residence is deemed to be a beneficial owner of Korean source income for income tax purposes. The benefits under a tax treaty between Korea and the country of such OIV’s residence will apply with respect to the relevant income paid to such OIV, subject to certain application requirements as prescribed by the Corporate Income Tax or Individual Income Tax Law. In the case of a tax exemption application, the withholding agent is required to submit such application (together with the applicable OIV report in the case of income paid to an OIV) to the relevant district tax office by the ninth day of the month following the date of the payment of such income.

Inheritance Tax and Gift Tax

If you die while holding an ADS or donate an ADS, it is unclear whether, for Korean inheritance tax and gift tax purposes, you will be treated as the owner of the common shares underlying the ADSs. If the tax authority interprets depositary receipts as the underlying share certificates, you may be treated as the owner of the common shares and your heir or the donee (or in certain circumstances, you as the donor) will be subject to Korean inheritance tax or gift tax presently at the rate of 10% to 50%, provided that the value of the ADSs or common shares is greater than a specified amount.

If you die while holding a common share or donate a common share, your heir or donee (or in certain circumstances, you as the donor) will be subject to Korean inheritance tax or gift tax at the same rate as indicated above.

At present, Korea has not entered into any tax treaty relating to inheritance or gift taxes.

Securities Transaction Tax

If you transfer our common shares on the Korea Exchange, you will be subject to securities transaction tax at the rate of ~~0.15%~~0.1% and an agriculture and fishery special surtax at the rate of 0.15% of the sale price of the common shares. If your transfer of the common shares is not made on the Korea Exchange, subject to certain exceptions, you will be subject to securities transaction tax at the rate of ~~0.5%~~0.45% and will not be subject to an agriculture and fishery special surtax.

Under the Securities Transaction Tax Law, depositary receipts (such as American depositary receipts) constitute share certificates subject to the securities transaction tax. However, the transfer of depositary receipts listed on the New York Stock Exchange, the Nasdaq Global Market, or other qualified foreign exchanges is exempt from the securities transaction tax.

In principle, the securities transaction tax, if applicable, must be paid by the transferor of the common shares or ADSs. When the transfer is effected through a securities settlement company in Korea, such settlement company is generally required to withhold and pay the tax to the tax authorities. When such transfer is made through a financial investment company only, such financial investment company is required to withhold and pay the tax. Where the transfer is effected by anon-resident without a permanent establishment in Korea, other than through a securities settlement company or a financial investment company, the transferee is required to withhold the securities transaction tax.

Non-reporting or under-reporting of securities transaction tax will generally result in penalties equal to 20% to 60% of thenon-reported tax amount or 10% to 60% of under-reported tax amount. Also, a failure to timely pay securities transaction tax will result in a penalty equal to ~~10.95%~~9.125% per annum of the due but unpaid tax amount. The penalties are imposed on the party responsible for paying the securities transaction tax or, if such tax is required to be withheld, on the party that has the obligation to withhold.

Item 10.F.

Dividends and Paying Agents

Not Applicable

Item 10.G.

Statements by Experts

Not Applicable

Item 10.H.

Documents on Display

We are subject to the information requirements of the Exchange Act, and, in accordance therewith, are required to file reports, including annual reports on Form20-F, and other information with the U.S. Securities and Exchange Commission. These materials, including this annual report and the exhibits thereto, may be inspected and copied at the Commission’s public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the Commission at1-800-SEC-0330 for further information on the public reference rooms. We are also required to make filings with the Commission by electronic means. Any filings we make electronically will be available to the public over the Internet at the Commission’s web site at http://www.sec.gov.

Item 10.I.

Subsidiary Information

Not Applicable

Item 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Overview

~~Our~~As a financial services provider, we are exposed to various risks related to our lending and trading businesses, our ~~deposit taking~~funding activities and our operating environment, ~~expose us to various risks.~~principally through Woori Bank, our banking subsidiary. Our goal in risk management ~~goal~~ is ~~to understand, measure and monitor these risks and~~ to ensure that we identify, measure, monitor and control the various risks that arise, and that our ~~employees~~organization adheres strictly ~~adhere~~ to the policies and procedures ~~that~~which we ~~establish.~~establish to address these risks. We seek to take a conservative approach to risk management in order to better insulate our operations from adverse events. Risks we face include:

credit risk;

market risk (primarily interest rate risk, equity risk, foreign exchange risk and commodity risk);

liquidity risk; and

operational and business risk (including legal risk).

We operate a standardized risk management ~~system. This~~ system which enhances our risk management capabilities by enabling us to exchange information among our and our subsidiaries’ risk management operations. We have further strengthened our risk management systems by (i) using Tier I capital as “available capital” for purposes of our risk capital allocation to fulfill Basel III requirements, and (ii) including “stressed VaR” to our market risk capital calculations in accordance with the guidance of the Financial Supervisory Service. We use our risk management systems to manage our risks within acceptable limits and to otherwise ensure the soundness of our assets and the stability of our operations.

We allocate our total risk capital in accordance with the guidelines set by our Board Risk Management Committee. As described in more detail below, the committee allocates risk capital ~~with respect to credit~~and approves the risk market risk, interest rate risk and operational risk with respect to us as well as Woori Card, Woori Investment Bank, Woori Private Equity, Woori Bank China Limited, Woori America Bank and PT Bank Woori Saudara Indonesia 1906, Tbk.

limit requests of our subsidiaries. Through our standardized risk management system, we allocate our risk capital:

with respect to our credit risk on the basis of a standardized approach as well as other portfolio credit ~~models developed by third party vendors;~~models;

with respect to our market risk for trading activities based on a ~~market value at risk, or “VaR,” system~~standardized method and ~~including “stressed VaR”;~~the VaR method and stress testing for Woori Bank; and

with respect to our interest rate risk based on a historical simulation method, which simulates the current portfolio’s net present value at a 99.9% confidence level for aone-year holding ~~period.~~period for Woori Bank and a standardized method for our other subsidiaries, in accordance with the Basel Framework.

We allocate our risk capital with respect to operational risk through an advanced measurement approach for Woori Bank and a standardized approach for our other subsidiaries, in accordance with Basel II.

Our risk capital allocation by entity as a percentage of available capital, on anon-consolidated basis, with respect to ~~2018~~2020 is as follows:


	Available capital⁽¹⁾		Risk capital		Risk appetite			Credit			Market			Operational			Interest rate			Correlation Effect			Buffer			Available capital⁽¹⁾		Risk capital		Risk appetite			Credit		Market		Operational		Interest rate
	(in billions of Won, except percentages)																									(in billions of Won, except percentages)
Woori Financial Group																											22,483		16,064		71.4	%		13,467		1,316		1,121		1,351
Woori Bank		18,916		13,220		69.9	%		60.2	%		5.4	%		4.6	%		4.5	%		(4.8	)%		30.1	%		20,994		14,588		69.5	%		12,229		1,298		992		1,136
Woori Card		1,551		853		55.0	%		47.2	%		0.0	%		5.7	%		7.0	%		(4.9	)%		45.0	%		1,679		1,091		65.0	%		895		0		100		193
Woori Investment Bank		279		233		83.5	%		73.5	%		8.2	%		2.9	%		2.5	%		(3.6	)%		16.5	%		348		313		89.9	%		287		12		12		15
Woori Private Equity		39		22		56.4	%		53.8	%		0.0	%		5.1	%		0.0	%		(2.6	)%		43.6	%		34		22		64.3	%		21		0		2		0
Woori America Bank		273		199		72.9	%		61.2	%		0.0	%		5.5	%		12.1	%		(5.9	)%		27.1	%
PT Bank Woori Saudara Indonesia 1906, Tbk		340		291		85.6	%		61.2	%		0.0	%		6.2	%		25.9	%		(7.6	)%		14.4	%
Woori Bank China Limited		494		438		88.7	%		67.0	%		11.9	%		3.8	%		11.9	%		(6.1	)%		11.3	%
Woori Asset Management																											105		26		25.1	%		18		4		4		4
Woori Global Asset Management																											27		6		22.1	%		2		2		2		1
Woori Asset Trust																											96		22		22.8	%		15		0		9		2

⁽¹⁾	Estimates based on Tier I capital.

Organization

We have a multi-tiered risk management governance structure. Our Board Risk Management Committee is ultimately responsible for ~~our~~group-wide risk ~~management.~~management, and directs the various subordinate risk management entities. The ~~Executive~~Group Risk Management ~~Committee~~Council answers to the Board Risk Management Committee and, together with the Group Risk Management Department, coordinates the execution of its ~~directives.~~directives with each Subsidiary Risk Management Department. Each Subsidiary Risk Management Committee, based on the Board Risk Management Committee’s directives, determines risk management strategies and implements risk management policies and guidelines for the relevant subsidiary, sets the subsidiary’s operational and business risk management policies and guidelines and directs the ~~subsidiary’s risk management groups~~applicable Subsidiary Risk Management Department with support from the applicable Subsidiary Risk Management Council, but must keep within the risk guidelines of the Board Risk Management Committee. The Subsidiary Risk Management Committees generally receive input from their respective Subsidiary Risk Management Councils and ~~subsidiary risk management groups.~~Subsidiary Risk Management Departments.

The following chart sets out our risk management governance structure as of the date of this annual report:

We operate a “double report” system with respect to our risk management procedures. Each of our ~~subsidiary risk management groups~~Subsidiary Risk Management Departments is required to submit risk management reports directly to the Group Risk Management Department. Through this internal reporting system, we are able to better ascertain and strengthen the monitoring of our subsidiaries’ risk management and are able to quickly address any deviation from our group-wide risk policies. We have further supplemented our double report system by strengthening the role and independence of chief risk officers in our subsidiaries ~~(including the appointment of dedicated chief risk officers in all of our subsidiaries)~~ and expanding the role of ~~subsidiary risk management groups.~~Subsidiary Risk

Management Departments. Each ~~subsidiary risk management group~~Subsidiary Risk Management Department is required to report directly to such subsidiary’s chief risk officer on all material risk management issues as well as following the procedures under the double report system.

The Board Risk Management Committee, the ~~Executive~~Group Risk Management ~~Committee,~~Council, the Subsidiary Risk Management Committees and the Subsidiary Risk Management Councils are responsible for managing risks relating to credit, markets, asset and liability management ~~liquidity~~ and ~~operations~~liquidity. Each Subsidiary Risk Management Department is generally responsible for managing operational risks at the relevant subsidiary, while the Audit Department coordinates the execution of our operational and ~~business.~~business risk management policy, particularly with regard to internal subsidiary practices, and the Legal and Compliance Department monitors compliance risk and makes suggestions regarding regulatory issues to the Financial Supervisory Service.

Board Risk Management Committee

The Board Risk Management Committee is our highest decision-making body with respect to our risk management operations. ~~It oversees~~Our board of directors has delegated to it the authority to oversee and ~~makes~~make determinations on all significant issues relating to our risk management system. It implements policies regarding, monitors and has ultimate responsibility for managing credit, market and liquidity risk and for asset and liability management. The committee’s major activities include:

determining and amending risk management policies, guidelines and limits in conformity with the strategy established by the board of directors;

determining the appropriate level of risks that we should be willing to undertake, including in connection with key business activities such as acquisitions, investments or entering into new business areas, prior to a decision by the board of directors on such matters;

allocating risk capital to each subsidiary and approving the risk limits of our ~~business groups’ risk limit requests;~~subsidiaries;

reviewing our group-wide risk profile, including the level of risks we are exposed to and the status of our risk management operations; and

monitoring our subsidiaries’ compliance with our risk policies.

The Board Risk Management Committee is ~~comprised~~composed of one standing director, onenon-standing director and three outside directors. It operates independently from all business groups and individual board members, and reports directly to our board of directors. We require the chairperson of the Board Risk Management Committee to be chosen from among the outside directors in order to enhance the independence and experience level of such chairperson. Our Board Risk Management Committee convenes at least quarterly, and makes decisions by a majority vote of the attending members. At least a majority of the committee members must attend to constitute a quorum.

~~Executive~~Group Risk Management ~~Committee~~Council

Our ~~Executive~~Group Risk Management ~~Committee seeks~~Council is responsible for coordinating with the Subsidiary Risk Management Departments to ~~maintain our asset quality~~ensure that they execute the policies, guidelines and ~~stabilize or improve our profitability through the execution of its risk management duties as delegated~~limits established by the Board Risk Management Committee. The ~~Executive~~Group Risk Management ~~Committee’s~~Council’s major activities include:

analyzing our risk status using information provided by ~~our~~the Subsidiary Risk Management ~~Department;~~Departments;

adjusting the integrated risk-adjusted capital allocation plan and risk limits for each of our subsidiaries;

reviewing ~~agenda items~~the key decisions of each Subsidiary Risk Management Committee and discussing and resolving any risk management issues raised by those committees;

coordinating issues relating to the integration of our risk management functions; and

performing any other duties delegated by the Board Risk Management ~~Committee meetings;~~Committee.

~~reviewing the risks of annual business plans and allocating risk capital accordingly;~~

~~establishing policies to comply with applicable capital adequacy requirements;~~

~~determining standards and methods to measure risk and setting total exposure limits and contingency plans, by risk type;~~

~~reviewing, adjusting and monitoring funding strategies and plans as well as related decision-making authority;~~

~~monitoring interest rates relating to lending and deposit-taking; and~~

~~reviewing risks relating to the introduction of new products.~~

The ~~Executive~~Group Risk Management ~~Committee~~Council consists of ~~seven~~eight members, including our chief risk officer and the ~~head~~chief risk officers of our ~~business support group, who acts as chairman, the head of our risk management group, the head of our credit support group and the head of our finance and management planning division.~~subsidiaries. It operates independently from all business groups, and reports directly to the Board Risk Management Committee. The ~~Executive~~Group Risk Management ~~Committee~~Council convenes on a ~~monthly~~quarterly basis.

Our subsidiaries, in most cases through their respective Subsidiary Risk Management ~~Department provides~~Departments, provide a variety of information to the ~~Executive~~Group Risk Management ~~Committee,~~Council, including:

reports regarding the status of overall risk management, the status of limit compliance, and analysis and results of stress testing and back testing; and

reports regarding asset and liability management matters, including changes in risk-weighted assets and the status of our credit portfolio on a periodic basis.

Subsidiary Risk Management Committees

Each of our ~~subsidiaries has delegated~~subsidiaries’ operating businesses that require risk management delegates risk management authority to its Subsidiary Risk Management Committee. Each Subsidiary Risk Management Committee measures and monitors the various risks faced by the relevant subsidiary and reports to that subsidiary’s board of directors regarding decisions that it makes on risk management issues. It also makes strategic decisions regarding the operations of the relevant subsidiary, such as allocating credit risk limits, setting total exposure limits and market risk-related limits and determining which market risk derivatives instruments the subsidiary can trade. The major activities of each Subsidiary Risk Management Committee include:

determining and monitoring risk policies, guidelines, limits and tolerance levels and the level of subsidiary risk in accordance with group policy, with the support of the relevant Subsidiary Risk Management Council;

reviewing and analyzing the subsidiary’s risk profile;

setting limits for and adjusting the risk-adjusted capital allocation plan and risk levels for each business group within the subsidiary; and

monitoring compliance with our group-wide risk management policies and practices at the business group and subsidiary level.

Subsidiary Risk Management Council

Each of our relevant subsidiaries has a Subsidiary Risk Management Council, which is responsible for supporting the relevant Subsidiary Risk Management Committee in the implementation of its risk management policies and guidelines for such subsidiary, including by reviewing and reporting on agenda items to be discussed at meetings of the relevant Subsidiary Risk Management Committee, reviewing reports from the relevant Subsidiary Risk Management Department and performing any other duties delegated by the relevant Subsidiary Risk Management Committee.

Each Subsidiary Risk Management ~~Committee~~Council is generally ~~includes two or more outside directors~~comprised of the ~~subsidiary.~~subsidiary’s chief risk management officer, the head of its Subsidiary Risk Management Department and other executive officers responsible for such subsidiary’s risk management-related functions. It operates independently from all business units, and reports directly to the Subsidiary Risk Management Committee.

Credit Risk Management

Our credit risk management policy objectives are to improve our asset quality, reduce ournon-performing loans and minimize our concentration risk through a diversified, balanced and risk-weighted loan portfolio. We manage credit risk and continually monitor and improve our credit risk-related policies and guidelines to reflect changing risks in our business and the industries and sectors in which our customers operate. For example, we have recently strengthened our monitoring of asset quality and analysis of risk indicators by focusing on industries and sectors that are impacted by theCOVID-19 pandemic and will continue to do so by reflecting any additional volatility or long-term effects thereof.

We believe that an essential part of achieving our credit risk management objectives is utilizing a standardized risk management system so that we can identify and manage the risks generated by our businesses using a consistent approach. ~~We are~~Woori Bank is currently using a centralized credit risk management system called the ~~CREPIA~~Credit Wizard system. ~~CREPIA~~Credit Wizard is a credit risk management system which combines credit risk management and the credit approval process on a transactional level with respect to individual borrowers and approval with respect to each individual loan or credit. The system quantifies credit risk with respect to corporate borrowers using a ~~“mark-to-market”~~“mark-to-market” methodology, which reflects both the likelihood of a default by a borrower as well as the likelihood of a change in such borrower’s credit rating, and quantifies credit risk with respect to retail borrowers using a “default mode” methodology, which reflects the likelihood of a default by a borrower. We believe that ~~CREPIA~~our Credit Wizard system is a systematic and efficient credit evaluation system and that ~~we have~~Woori Bank has expedited ~~our~~its loan review process and improved ~~our~~its ability to monitor and evaluate ~~our~~its overall risk profile by using this system. The main characteristics of ~~CREPIA~~our Credit Wizard system are as follows:

•

automation of credit risk management system, which allows us to centralize and automate many tasks relating to our credit risk management system;

•

automatic recognition and processing of different forms of credit, which allows us to process and approve different types of credit, such as new applicants, renewing applicants and changes in the condition of the loan or credit approved;

•

incorporation of credit risk management prior to approval of credit, which allows us to consider individualized characteristics of a borrower and enables us to calculate a more accurate price with respect to the loan or credit approved;

•

automatic credit risk monitoring after approval of credit, which allows us to evaluate andre-rate the loan or credit on a real-time basis as a result of any change in the characteristics of the borrower (including the condition of the underlying collateral, change in borrowing limit and early warning characteristics); and

•

automatic verification of internal procedures and regulations with respect to approval of credit, which reduces our operational risk and ensures that there are no material deviations from our loan and credit policies.

We also impose a credit risk limit for Woori Bank with respect to “large exposures.” We aim to avoid concentrations of exposure with respect to any single corporate borrower or affiliated group of corporate borrowers. Accordingly, we have established aggregate exposure limits based on ~~our~~ capital adequacy levels of Woori Bank and, with respect to individual corporate borrowers, established limits by dividing the “expected loss” with respect to companies affiliated with such corporate borrower with the “unexpected loss” (a measurement of credit risk) of such borrower and converting that into an exposure amount. We use this as the basis for our “large exposure” limits with respect to such corporate borrower.

We also impose a similar credit risk limit for Woori Private Equity Asset Management with respect to investment in private equity funds. Much like “large exposure” limits with respect to corporate borrowers, we aim to avoid concentrations of exposure with respect to any single private equity fund or affiliated group of funds. Accordingly, we have established aggregate investment limits based on the capital adequacy levels of Woori Private Equity Asset Management and, with respect to limits on each opportunity to invest, established limits depending on whether the target fund is an affiliate, or our participation or the participation by our subsidiaries is as a limited or general partner. We also impose a “principal investment” limit for investment activities that ~~we and~~ our subsidiaries undertake as a principal (as opposed to as an agent). The principal investment limit for each ~~entity~~subsidiary is set as a certain percentage of the capitalization of such ~~entity.~~subsidiary.

We use our credit risk management systems to measure and control credit risk, to evaluate and approve new credit and to review and monitor outstanding credit. We conduct various quantitative and qualitative analyses to establish acceptable risk levels that provide what we believe are appropriate levels of return on investments. The credit risk management systems that we use to do this integrate various data, including customers’ financial and

economic condition, limits on loans and guarantee amounts, cash flow evaluations, collateral levels, our desired profit margin and the likelihood of unexpected loan losses.

Each relevant subsidiary monitors its level of risk, determines how that level compares to our target optimized level of risk on a monthly basis and produces risk analysis reports and optimization reports on a monthly basis and stress test reports on an ad hoc basis. These reports are sent to the respective Subsidiary Risk Management Committees and to the Board Risk Management Committee and provide a basis to set risk limits for, and allocate capital to, a subsidiary’s business groups.

Credit Evaluation and Approval

~~We and our~~Our subsidiaries evaluate the credit of every loan applicant and guarantor before approving any loans, except for:

loans guaranteed by letters of guarantee issued by the Korea Credit Guarantee Fund, the Korea Technology Credit Guarantee Fund or certain other specified Korean government-controlled funds;

loans guaranteed by ~~highly rated~~highly-rated banks;

loans fully secured by deposits with us; and

loans against commercial promissory notes issued by creditworthy companies at a discount to the face value of the note determined by the issuer’s creditworthiness.

The evaluation and approval process differs depending on whether the loan is a corporate loan, a general household consumer loan, or a mortgage or home equity loan, and there is a separate process for credit card

applications. ~~We have~~For example, Woori Bank has in recent years implemented a standardized “expected loss” and “unexpected loss” credit risk system which we believe enables us to better allocate risk capital by evaluating “unexpected loss” (a measurement of credit risk), “VaR” (a measurement of market risk) and “earnings at risk” (a measurement of whether our assets and liabilities are mismatched).

~~We have~~Woori Bank has also undertaken a number of initiatives to develop credit evaluation and loan approval procedures that are more systematic and efficient. We prefer to use credit rating systems in our credit evaluation and loan approval process because they:

yield a uniform result regardless of the user;

can be used effectively by employees who do not have extensive experience in credit evaluation;

can be easily updated to reflect changing market conditions by changing how factors are weighted;

significantly limit the scope of employee discretion in the loan assessment and approval process; and

improve loan processing times while generally resulting in declines in delinquencies among new borrowers.

~~We operate~~Woori Bank operates a ~~CREPIA~~Credit Wizard credit evaluation system for corporate loans (including small- andmedium-sized enterprise loans) and a consumer credit evaluation system for consumer loans.

Customers apply for loans by submitting a loan application through one of ~~our~~Woori Bank’s branches. These applications are initially reviewed using the appropriate credit evaluation system and, in the case of applications for a small amount or involving applicants with little or no credit risk, are approved by the branch manager or a relationship manager acting in concert with a credit officer based on the credit risk rating they receive under that system. Applications for larger loans and loans which are determined to involve greater credit risk are approved by bodies with greater authority, depending on where those loans fall in a matrix of size, collateral and credit risk. These loan applications will be referred to a credit officer committee at an office located near the customer, which may or may not be at ~~our~~Woori Bank’s headquarters. Every credit officer committee is made up of credit officers from headquarters and has the same level of authority. Applications that cannot be approved by a credit officer committee are referred to a senior credit officer committee or ~~our~~the Loan Committee of Woori Bank,

depending on loan size, collateral and credit risk. The following table sets forth ~~as an example our~~the various Woori Bank committees and personnel involved in ~~our~~its credit evaluation and loan approval process:


Committee	Members	Approval Process
Headquarters Approval
Loan Committee	Head of the credit support group, head of the risk management ~~group,~~department, head of the investment banking group, head of the corporate banking business group, head of the capital market group, head of the large corporate audit department and head ofmedium-size enterprise audit department (no more than seven persons)	2/3 required for approval; 2/3 required to participate

Headquarters/Regional Approval
Senior Credit Officer Committee	One head senior credit officer and four to six other senior credit officers (five to seven persons)	2/3 required for approval; 2/3 required to participate
Credit Officer Committee	At least one senior credit officer and two other credit officers (at least three persons)	2/3 required for approval; 2/3 required to participate


~~Committee~~	~~Members~~	~~Approval Process~~

Individual Approval
~~Senior Relationship Manager~~	~~Individual~~	~~Approval of the individual~~
~~Relationship Manager~~Loan Officer	Individual	Approval of the individual
Branch Manager	Individual	Approval of the individual
Head of Team	Individual	Approval of the individual

Different individuals or committees review and approve loan applications depending on various factors, including:

the size and type of the loan;

the level of credit risk established by the credit rating system;

whether the loan is secured by collateral; and

if the loan is secured, an assessment of the collateral.

Loan applications are generally reviewed only by the highest-level committee required to approve the loan, although multiple reviews, including separate reviews at the branch, regional and headquarters level, may occur depending on the size and terms of any particular loan or a borrower’s credit risk.

Corporate Loan Approval Process

~~Our~~Woori Bank’s branches review corporate loan applications using a credit evaluation system for corporate borrowers. Each corporate credit evaluation system measures various quantitative and qualitative factors. The model used by the credit evaluation system to review an application depends, however, on certain characteristics of the potential borrower. ~~Our~~Woori Bank’s credit risk management ~~department,~~unit, together with ~~our~~its large corporate loan department and small- andmedium-sized enterprise loan department, has developed separate credit evaluation models for large corporate borrowers that are subject to external audit under the Act on External Audits of Stock Companies, large corporate borrowers that are not subject to external audit,medium-sized enterprises and SOHO borrowers that either have outstanding loans, or are applying for a loan, in excess of ￦1 billion. In general, each model uses scores from both a computerized evaluation of quantitative financial factors, such as cash flow and income, and more qualitative factors which are scored using judgments by the credit officer or officers reviewing the application to produce an overall credit risk rating. These credit evaluation systems provide usWoori Bank with tools to make consistent credit decisions and assist usit in making risk-based pricing decisions. ~~Our CREPIA~~Woori Bank’s Credit Wizard system, depending on whether the borrower is audited by independent auditors and its size,

produces two separate scores based on one of 14five principal rating models: one for quantitative current financial factors, which is weighted ~~60%~~60 to 70% in determining the ~~CREPIA~~Credit Wizard credit risk rating, and another for the more qualitative factors that the judgment of ~~our~~ credit officers plays a more significant part in determining, which is weighted 30 to 40%. The ~~CREPIA~~Credit Wizard credit risk rating estimates the probability that weWoori Bank will recover extended credits and the likelihood that borrowers will default. Qualitative factors included in ~~CREPIA~~the Credit Wizard system include:

its industry situation;

a customer’s future financial condition;

its competitive position in the industry;

~~its industry situation;~~

the quality of its management; and

its operations.

Other indirect factors included in the credit risk rating include:

its technological merits;

~~its operations;~~

the nature and the location of any collateral; and

~~our~~
Woori Bank’s level of priority in that collateral to estimatenon-recovery risks.

These qualitative factors are input into the ~~CREPIA~~Credit Wizard system by the credit officer, and are ~~scored~~rated based on his or her historical experience and that of the bank.

The ~~CREPIA~~Credit Wizard system produces separate credit risk ratings for each ~~borrower and for each loan requested by that~~ borrower. ~~Our~~Woori Bank’s credit analysis and approval center evaluates and approves corporate loan applications based on these credit risk ratings. The ~~CREPIA~~Credit Wizard system assigns each borrower and facility one of the following ~~fourteen~~14 credit risk rating grades from AAA to D, which are classified as follows: AAA (extremely strong), AA (very strong), A+ (strong), A– (good), BBB+ (more adequate), BBB (adequate), BBB– (less adequate), BB+ (less susceptible), BB (susceptible), BB– (more susceptible), B+ (slightly weak), B– (weak), C (very weak) and D (default). Certain loans are subject to review by the Loan Committee depending on the size of the loan and the determined credit risk rating. Examples of this include loan applications for secured loans in excess of ￦80 billion for a borrower or facility with a credit risk rating ofA- and above, and, at the other extreme for unsecured loans, loan applications in excess of ￦4 billion for a borrower or facility with a credit risk rating of BB– to C. Applications from borrowers with loans on a watch list (see “—Credit Review and Monitoring” below) are also automatically reviewed by the Loan Committee.

We use the same systems to evaluate and approve applications from small- and medium-sized enterprises that it uses to evaluate other corporate borrowers, but uses different credit evaluation models. Our credit evaluation models for small- and medium-sized enterprise customers, which are incorporated into the CREPIA system, use the same quantitative and qualitative factors that we use to evaluate other corporate customers. However, the small- and medium-sized enterprise models apply a 50% weighting to the score derived from quantitative factors and a 50% weighting to the score derived from the more flexible qualitative factors in determining the credit risk rating. We also useWoori Bank has adopted a separate ~~credit evaluation model to evaluate newly opening small-~~ and ~~medium-sized enterprises that relies solely on qualitative factors. In addition, we have adopted a separate~~simpler credit evaluation system for SOHOs (such as pharmacies, clinics and restaurants) ~~which~~that either have outstanding loans, or are applying for a loan, of ￦1 billion or ~~less that~~less. The system uses simpler credit evaluation models and resembles ~~our~~Woori Bank’s application scoring system for new retail customers. It assigns a credit score ranging from one to ten to each application based on its evaluation of various factors. Applications are classified as either approved or rejected, which is the same as the consumer loan approval process, based on a combination of the internal credit scoring system and the external credit score.

With respect to the evaluation of any collateral to which a commercial loan application relates (which principally consists of land, buildings and equipment), the fair value of such underlying collateral for commercial loans is appraised by external valuation experts and such appraisals are collated in ~~our CREPIA~~Woori Bank’s Credit Wizard system. ~~We use our CREPIA~~Woori Bank uses its Credit Wizard system to manage ~~our~~its lending activities, and ~~input~~inputs data gathered from loan application forms, credit scores of borrowers and the appraisal value of collateral provided by external valuation experts into the ~~CREPIA~~Credit Wizard system and ~~update~~updates such information periodically to reflect changes in such information (such as any changes in credit scores of borrowers or the appraisal value of collateral). In addition, to validate the appropriateness of the appraisal values provided by such external valuation experts, ~~we review~~Woori Bank reviews the qualification of the external valuation experts (including a review of whether such experts are legitimately registered with the Korea Association of Property Appraisers) and ~~evaluate~~evaluates the assumptions and valuation model used by such experts as well as the appropriateness of variables by reference to market data and comparisons to actual transaction prices in similar regions.

We have set credit limits for our corporate customers. Some of these limits, particularly those imposed by Korean banking regulations, are aimed at preventing loan concentrations relating to any single customer. See “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Banks—Financial Exposure to Any Individual Customer or Major Shareholder.” In certain cases, we have introduced and implemented ~~internally developed~~internally-developed large exposure limits that are stricter than the applicable Financial Services Commission requirements.

In evaluating applications, credit officers or the Loan Committee will often, in addition to reviewing ratings from these credit evaluation models, also refer to corporate information gathered or ratings assigned by external credit rating agencies, such as the Korea Federation of Banks, Korea Information Service, Korean government-released information on bankruptcy rates, National Information & Credit Evaluation Inc. and Korea Management Consulting & Credit Rating Corporation. They review the information we obtain from these sources and compare it to the information we have developed internally with respect to our customers to improve the accuracy of our internal credit ratings.

Consumer Loan Approval Process

~~Our~~The consumer loan department of Woori Bank evaluates and approves consumer loan applications using a dedicated consumer credit evaluation system. ~~Our~~Woori Bank’s consumer credit evaluation system assigns a credit score to each application based on its evaluation of various factors. These factors include any loan and guarantee limits ~~we have~~Woori Bank has set for particular borrowers or groups of borrowers and our evaluation of their cash flows and credit profiles. The system gives each customer’s loan application a ~~score~~grade ranging from one to ten. WeWoori Bank also ~~use~~uses another scoring system based on the external ratings provided by the Korea Credit ~~Bureau.~~Bureau and NICE Information Service Inc. Applications are classified as “automatically approved,” “automatically rejected” and “subject to further evaluation” based on a combination of the scores of these two systems. ~~We use~~Woori Bank uses these systems to evaluate all new consumer loan applications, except for loans fully secured by deposits with ~~us.~~Woori Bank.

~~We augment our~~Woori Bank augments its consumer credit evaluation system with a behavioral scoring system. The behavioral scoring system enhances the consumer credit evaluation system by enabling the consideration of factors not previously evaluated, including the customer’s spending history and credit behavior. By the nature of the information it analyzes, however, the behavioral scoring system can only be used for applications of persons who are existing borrowers, generally consisting of roll-overs of outstanding ~~amounts or increases to existing credit limits.~~amounts.

We also evaluate any collateral to which a consumer loan application relates (which principally consists of residential properties) using the fair value of the underlying collateral appraised by Korea Investors Service as part of our loan approval process. Such appraisals are collated in ~~our CREPIA~~the Credit Wizard system used by Woori Bank, and such information is updated periodically to reflect changes (such as any changes in credit scores of borrowers or the appraisal value of collateral). For example, weWoori Bank automatically ~~obtain~~ obtainsre-evaluations for the underlying collateral for secured consumer loans and mortgages every month with respect to apartments. If the value of the collateral declines, we may have the ability to require that the borrower provide more collateral or to change the payment terms of the relevant loan.

Credit Card Approval Process

We have worked to ensure that ~~our~~ risk management and credit extension policies ~~are consistently reflected~~ with respect to our credit card ~~operations.~~operations through our indirect subsidiary, Woori Card, reflect our group-wide risk management policies and guidelines.

Woori Card reviews each new card application for completeness, accuracy and creditworthiness. It bases this review on various factors that assess the applicant’s ability to repay borrowed amounts. The review process involves three stages:

•

Initial Application Process. Woori Card verifies basic information by requesting certain documents from the applicant, generally contacts the applicant directly (usually by telephone, although there are

personal visits to some applicants) and statistically analyzes the applicant’s personal credit history together with financial and default information gathered from third-party sources and its internal database. The analysis considers various factors including employment, default status and historical relationships with usWoori Bank and any delinquency history with other credit card companies. Woori Card also reviews information about an applicant obtained from external databases maintained by the Korea Federation of Banks and Nice Information Service Inc.

•

Application Scoring System Process. The application scoring system at Woori Card is a standardized evaluation tool used to determine the probability of a credit card applicant defaulting during theone-year period following issuance. The application scoring system, using a statistical model, assigns risks to factors that indicate a probability ofnon-payment. The model analyzes credit history, occupation and income data to develop a combined risk score. The applicant’s eligibility to receive a credit card and credit limit is determined by its anticipated delinquency ratio over 90 days within one year.

•

Credit Assessment. If the application is approved, then the application scoring system assessment is used to determine the applicant’s credit limit. The aggregate credit limit for a new applicant who is an individual rarely exceeds ￦20 ~~million. There~~million.There is a separate but similar system for determining the credit

limit available to corporate card applicants, which will generally be higher than limits available to individual applicants but will not provide for the ability to obtain cash advances.

The entire approval process generally takes two to three days and the applicant receives the new card within one week after making an application. Woori Card evaluates and updates the application scoring system on a monthly basis (or more frequently as required) to incorporate new data or adjust the importance placed on existing data or market conditions.

Credit Review and Monitoring

Our credit review and monitoring procedures are designed to reduce the risks of deterioration in our asset quality and to maintain acceptable levels of portfolio risk. These procedures include:

confirming a borrower’s credit rating or score;

ensuring the accuracy of the credit analysis done by our credit officers; and

ensuring compliance with internal policies relating to loan approval.

We believe that these procedures enable us to identify potentialnon-performing loans as soon as possible and minimize the possibility of approving in advance loans that will becomenon-performing. These procedures also enable us to manage credit risk more effectively and set interest rates to more accurately reach our targeted level of return.

Loan Review and Monitoring

~~We monitor~~Woori Bank monitors credit risk with respect to ~~our~~its borrowers using ~~our~~its loan review system. ~~We have~~Woori Bank has a loan review ~~department~~unit that oversees ~~our~~its review and monitoring efforts. After a loan has been approved, the relevant materials or the results generated by ~~our~~Woori Bank’s credit evaluation system, together with any supporting data, are reviewed by an officer in that ~~department.~~unit. There are three types of reviews that ~~our~~Woori Bank’s loan review ~~department~~unit undertakes:

•

Desk review. Desk reviews are the most common and are generally done within five days after a loan has been approved. Although the process is similar, different loans are automatically reviewed by Woori Bank based on the size of the loan. The loan review ~~department~~unit will initiate a desk review of loans approved by a credit officer committee or the Loan Committee, for any corporate loan over ￦5 billion, any consumer loan over ￦1 billion, any loan to a housing applicant group over ￦5 billion or any loan where the loan terms were adjusted. For loans originating from a branch, the loan review ~~department~~unit will randomly initiate a desk review for new domestic loans. For overseas loans, desk reviews are conducted for new loans (including credit limit increases) over US$300,000. Ex post desk reviews are also conducted on

consumer and corporate loans approved by a domestic branch manager for borrowers with aggregate unsecured loans over ￦50 million or aggregate secured loans over ￦300 million, and new consumer and corporate loans (including credit limit increases) over US$30,000 approved by overseas branch managers.

•

Periodic review. Periodic reviews are done on a quarterly, semi-annual or annual basis with respect to loans that are current and over ￦10 billion or with respect to borrowers who are on a “watch list” with respect to possible insolvency. Quarterly periodic reviews are done for certain corporate borrowers, depending on their size and the borrower’s industry.

•

Ad hoc review. Ad hoc reviews can be done at any time. The head of ~~our~~Woori Bank’s Risk Management Department or ~~our~~the chief executive officer or chief financial officer of Woori Bank can initiate ad hoc reviews. Loan review officers who are responsible for desk and periodic reviews also conduct ad hoc reviews.

Following a review, ~~our~~Woori Bank’s sales office may hold additional meetings with the borrower and adjust the loan amount or the borrower’s credit rating. The loan review ~~department~~unit may also direct sales office personnel to institute early collections or to adjust a borrower’s credit rating, total exposure and asset portfolio without

consulting the borrower. The loan review officer may request that the credit officer adjust a borrower’s credit ratings based on various factors, including asset quality, credit limits, applied interest rates and our credit policies. We also continually review other factors, such as industries in which borrowers operate and their domestic and overseas assets and operations, to ensure that our ratings are appropriate.

~~We monitor~~Woori Bank monitors and ~~manage our~~manages its exposures to and credit limits for corporations andchaebols on a daily basis. ~~We use our~~Woori Bank uses its Total Exposure Management System to make real-time inquiries regarding ~~our~~its exposures, either by company or bychaebol, and to manage the credit limits for all kinds of business transactions. ~~We monitor~~Woori Bank monitors and ~~analyze~~analyzes these exposures on a monthly basis. Corporate borrowers on ~~our~~Woori Bank’s “watch list” are monitored more closely and with respect to additional aspects of their relationships with us. WeWoori Bank places borrowers on ~~our~~its watch list when ~~we believe~~it believes that any impediment on a borrower’s ability to meet its financial obligations exists or is pending. WeWoori Bank may also monitor newly extended credits or any additional credits extended to a previous borrower more frequently if ~~we believe~~it believes additional monitoring is necessary after reviewing the loan approval process. Credits outstanding to a particular industry or region that ~~we believe~~Woori Bank believes are higher risk are monitored even more frequently. Based on the results of such monitoring, ~~our~~the loan review ~~department~~unit of Woori Bank provides monthly reports to ~~our~~its chief executive officer and ~~our Board~~its Risk Management Committee.

~~We have~~Woori Bank has the ability to conduct daily surveillance on the status of ~~our~~its retail borrowers through an ~~on-line~~online system established by the Korea Federation of Banks. This system, which tracks consumer loans at all major Korean banks andnon-banking institutions, permits us to track all loan defaults by any borrower. ~~We evaluate~~Woori Bank evaluates the need to monitor consumer loans by using ~~our~~its consumer credit evaluation system, including its behavioral scoring system, and ~~make~~makes adjustments to the credit scoring formula based on the results of that process.

~~Our~~Woori Bank’s loan review ~~department~~unit in ~~our risk management group~~its Risk Management Department is required to submit monthly loan review reports and quarterly deficiency reports to the chief executive officer and the head of the ~~risk management group.~~Risk Management Department of Woori Bank. The chief executive officer then provides feedback to the relevant sales offices of ~~our~~Woori Bank’s branches through ~~our~~its auditing team or relevant business group. Based on these reports, we may, for example, stop lending to particular borrowers, change credit limits or modify our loan approval procedures. We do not monitor loans to certain borrowers, such as loans to government entities.

Credit Card Review and Monitoring

Woori Card monitors its risk exposure to individual accounts on a regular basis. It monitors each customer’s card usage trends and negative credit data such as delinquency information through both its own credit risk management system (which was developed with the assistance of an outside consultant) and BC Card’s similar

system (which BC Card maintains for its member institutions). These systems monitor the behavior of users of Woori Card’s credit cards, using both internally generated information and information from external sources. Woori Card statistically analyzes this information to estimate each customer’s creditworthiness on a monthly basis. The credit risk management system is an integral part of the credit practices at Woori Card and is used to determine increases or decreases in credit limits, reset interest rates, set fee levels, authorize special transactions and approve card loans using criteria such as:

how much credit each customer has incurred in the past (i.e., frequency and amount of payments);

whether a customer uses his card to make credit card purchases or to get cash advances;

internal credit scores; and

whether the customer has been delinquent in making payments.

After assigning appropriate weightings to each factor, the system computes a behavior score and uses that score to classify each cardholder. Each customer’s credit limit is subject to adjustment in accordance with the monthly updated score. Woori Card uses these results and the results of its application scoring system to evaluate its credit risk management system and make adjustments to its credit scoring formula based on the results of that process.

Woori Card’s credit risk management system has also been able to run various simulations in connection with monitoring its operations, including:

•

new product simulations, which predict a customer’s likely spending pattern when using a new credit card product and analyzes that pattern to predict the new product’s costs, delinquencies and profitability; and

•

credit use limit simulations, which test whether a customer’s credit limit has been properly set by simulating an increase or decrease of that limit.

Woori Card’s credit administration team manages customer credit risk for users of its credit cards. It reviews and updates its underwriting, credit evaluation, collection, servicing andwrite-off procedures, and the terms and conditions of card agreements, from time to time in accordance with its business practices, applicable law and guidelines issued by regulatory authorities.

Early Warning Systems

WeWoori Bank and Woori Card have developed separate early warning systems that monitor the status of both commercial and retail borrowers and evaluate all of a customer’s outstanding credits. These systems monitor various factors, including the financial status, financial transaction status, industry rating and management status of borrowers. They enable usour subsidiaries to find defaults and signs of potential delinquency in advance, monitor these problematic credits properly before any default or delayed payment occurs and keep track of information on the credit status of borrowers. Updated information is input as it becomes available, either automatically from internal and external sources or manually. This information includes data relating to:

credit evaluation and monitoring system results, which determine if a borrower should be put on a watch list;

loan transactions, such as a borrower’s remaining line of credit and whether it has any dishonored notes, overdue loans or setoffs with respect to collateral deposits which have not matured;

deposit transactions, such as any decrease in a borrower’s average deposit balance, requests for large volumes of promissory notes or checks, or the inability to pay immediately available funds owed when due;

foreign exchange transactions, such as unpaid amounts of a borrower’s purchased export bills that have exceeded the maturity date; and

other information, such as a borrower’s management and employees, business operations, production operations, financial affairs and accounting operations and bank transactions.

We also monitor borrowers’ credits through ~~on-line~~online credit reports that are provided by Korea Information Service and National Information & Credit Evaluation, Inc., which are Korean credit reporting agencies.

After gathering this information, ~~our CREPIA~~for example at Woori Bank, the early warning system reviews such information to monitor any changes that could affect the credit rating of the borrower, approval conditions with respect to the loan or credit, underlying collateral or assigned credit limit of the borrower. Depending on the likelihood of the change, the system automatically sends a signal to the responsible credit officer. The officer then evaluates the information and formulates an action plan, which could result in an adjustment in the borrower’s credit rating or loan pricing, are-evaluation of the loan or the taking of other preventative measures.

Credit Remediation

We believe that by centralizing the management of ournon-performing credits within each subsidiary, we can implement uniform policies fornon-performing credit resolution, pool institutional knowledge and create a more specialized (and therefore more efficient) work force. ~~Our~~To the extent relevant to its business, each of our subsidiaries has one or more units that are responsible for managingnon-performing loans. At Woori Bank, for example, the Credit Management and Collection Department and ~~our~~the Corporate Restoration Department generally oversee the process for resolvingnon-performing loans transferred to them by ~~our~~Woori Bank’s other business groups. When a loan becomesnon-performing, the Credit Management and Collection

Department and the Corporate Restoration Department will begin a due diligence review of the borrower’s assets, send a notice demanding payment or stating that the group will take legal action, and prepare for legal action. At the same time, ~~we initiate our~~ Woori Bank initiates itsnon-performing loan management process. Once ~~we have~~Woori Bank has confirmed the details of anon-performing loan, ~~we make~~it makes efforts to recover amounts owed to ~~us.~~it. Methods for resolvingnon-performing loans include commencing collection proceedings or legal actions and writing off such loans, transferring them to ~~subsidiaries~~affiliates in charge of collection and authorizing those subsidiaries to recover what they can. We have also disposed of a number of non-performing credits to UAMCO and various structured companies. See “Item 4.B. Business Overview—Assets and Liabilities—Asset Quality ofLoans—Non-Performing Loan Strategy.”

Market Risk Management

The principal market risks to which we are exposed are interest rate risk, foreign exchange risk and, to a lesser extent, equity risk and commodity risk. We divide market risk into risks arising from trading activities and risks relating to management of our assets and liabilities. ~~The financial instruments that expose us to market risks are primarily trading and available-for-sale securities and financial derivatives and, with respect to commodity risk, commodity derivatives.~~

Our Board Risk Management Committee establishes risk capital allocation ~~and risk limits~~ for our trading activities. ~~The Board Risk Management Committee has delegated the responsibility for coordinating market risk management for trading activities to the Executive Risk Management Committee. The~~Our Group Risk Management Department ~~reviews on a daily basis reports that include trading profits~~ and ~~losses, position reports, stress test results and “value at risk” results for~~ our ~~trading activities. Any violations of such~~Subsidiary Risk Management Departments, in turn, manage more specific risk limits ~~are reported~~and loss limits and regularly report the results to ~~the Executive~~our Board Risk Management Committee and the ~~Board~~relevant Subsidiary Risk Management ~~Committee.~~Committees.We use the standardized method and the internal model method to measure and analyze the market risk from our trading activities.

Market Risk Management for Trading Activities

We measure market risk from trading activities to monitor and control the risk of our business groups and teams that perform those activities. Our trading activities consist of:

trading activities for our own account to realize short-term trading profits in debt (primarilyWon-denominated), equity and foreign exchange markets based on our forecasts of changes in market situation and customer demand; and

trading activities involving derivatives transactions, including interest rate and foreign exchange swaps, forwards, futures and options and, to a lesser extent, commodity derivatives, primarily to sell derivatives products to our customers and to hedge our own market risk.

Market risk arising from our trading activities can be subdivided into interest rate risk, foreign exchange risk, equity risk and commodity risk:

Interest rate risk is a significant risk to which our trading activities are exposed. This risk arises primarily from our debt ~~securities.~~securities (which are primarily held by Woori Bank). We set different risk limits for our interest rate risk for our trading andnon-trading debt portfolios.

Foreign exchange risk arises from foreign currency-denominated assets and liabilities in both our trading andnon-trading accounts and financial derivatives involving foreign currencies, which are not controlled separately on a trading and asset/liability management basis.

Equity risk arises from price and volatility fluctuations in equity securities and derivatives.

Commodity risk arises from price and volatility fluctuations in commodity derivatives.

The following table shows the volume and types of ~~our~~Woori Bank’s trading positions (including trust accounts) subject to market risk as of December 31, ~~2015, 2016~~2017, 2018 and ~~2017:~~2019:


	As of December 31,						As of December 31,
	2015		2016		2017		2017		2018		2019
	(in millions of Won)						(in millions of Won)
Debt securities	￦	2,354,266	￦	2,644,916	￦	2,644,334	￦	2,644,334	￦	1,687,869	￦	1,284,003
Equity securities		70,418		40,442		21,666		21,666		218,574		243,629
Spot exchanges⁽¹⁾		386,350		1,029,928		1,049,388		1,049,388		1,173,041		1,301,228
Derivatives⁽²⁾		5,246,017		6,235,454		6,627,055		6,627,055		4,606,411		6,299,833

Total	￦	8,057,051	￦	9,950,740	￦	10,342,443	￦	10,342,443	￦	7,685,895	￦	9,128,693

⁽¹⁾	Represents the overall net open currency position in each currency, which is the greater of (i) the sum of the absolute values of all short positions and (ii) the sum of the absolute values of all long positions.

⁽²⁾	Forover-the-counter derivatives, represents the absolute value ofover-the-counter derivatives measured at fair value at the end of the relevant year. For exchange-traded derivatives, includes the amount of deposits and the collateral posted for such derivatives.

The Board Risk Management Committee monitors ~~our~~ market ~~risk.~~risk both for the group and for each relevant subsidiary individually. See “—Overview.” The Board Risk Management Committee has established a maximum ~~“market risk appetite,”~~“risk appetite” for each relevant subsidiary, which is defined as the risk capital of such subsidiary divided by its available capital. “Risk capital” is a benchmark figure that determines the ~~VaR~~market risk limits, accumulated loss limits (for trading portfolios) and present value of a basis point (or PVBP) limits (fornon-trading ~~available-for-sale assets).~~ debt securities) for each subsidiary. Available capital generally consists of shareholder’s equity. Using this benchmark, as of December 31, ~~2017,~~2019, we have established market risk limits with respect to Woori Bank as shown in the following table:


Trading Portfolio			Non-Trading Portfolio
VaR Limit	Accumulated Loss Limit		PVBP Limit
VaR Limit	Quarter	Annual	PVBP Limit
(in billions of Won)
￦ ~~14.4~~16.5	￦ 5968.1	￦ ~~118~~136.2	￦ ~~4.8~~5.3

WeEach of our relevant subsidiaries generally ~~manage our~~manages its market risk at the portfolio level. To control ~~our~~its exposure, ~~we take~~each such subsidiary takes into consideration the ~~VaR~~market risk limits, accumulated loss limits and PVBP limits set by the Board Risk Management Committee in determining ~~our~~its internal allocation of risk among ~~our~~its various portfolios. WeEach relevant subsidiary also ~~set~~sets its own stop loss limits with respect to particular types of transactions. ~~We use~~Woori Bank uses an integrated market risk management system to manage market risks for ~~our debt and equity~~ trading ~~operations. This system~~operations, which enables usWoori Bank to generate consistent VaR numbers for all of ~~our~~its trading activities.

In addition, ~~we have~~Woori Bank has implemented internal processes which include a number of key controls designed to ensure that fair value is measured appropriately, particularly where a fair value model is internally developed and used to price a significant product. See “Item 5.A. Operating Results—Critical Accounting

Policies—Valuation of Financial Assets and Liabilities” and Notes2-(9)-5),3-(3) and 11 of the notes to our consolidated financial statements. ~~For example, our~~Woori Bank’s Risk Management Department reviews the existing pricing and valuation models on a regular basis, with a focus on their underlying modeling assumptions and restrictions, to assess the appropriateness of their continued use. In consultation with ~~our~~its Trading Department, ~~the~~Woori Bank’s Risk Management Department recommends potential valuation models to ~~our~~its Fair Value Evaluation Committee. Upon approval by ~~our~~Woori Bank’s Fair Value Evaluation Committee, the selected valuation models are reported to ~~the Board~~its Risk Management Committee.

Value at Risk analysis. ~~We use~~Woori Bank uses daily VaR to measure market risk. ~~Our daily~~Daily VaR is a statistically estimated maximum amount of loss that can occur for a day. ~~We use~~Woori Bank uses a 99% confidence level to measure ~~our~~its daily VaR, which means the actual amount of loss may exceed the VaR, on average, once out of 100 business days. ~~We use~~Woori Bank uses the “historical simulation method” which takes into account the diversification effects among different risk factors.

Although VaR is a commonly used market risk management technique, it has some inadequacies. Since it is a statistical approach, VaR estimates possible losses over a certain period at a particular confidence level using

past market movement data. Past market movements, however, are not necessarily a good indicator of future events. Another problem with VaR is that the time periods used for the model, generally one or 10 days, are assumed to be a sufficient holding period before liquidating the relevant underlying positions. If these holding periods are not sufficient, or too long, VaR may understate or overstate the potential loss. VaR is most appropriate as a risk measure for trading positions in liquid financial markets and will understate the risk associated with severe events, such as a period of extreme liquidity.

The following table shows ~~our~~Woori Bank’s daily VaR as of December 31, ~~2015, 2016~~2017, 2018 and ~~2017~~2019 at a 99% confidence level for aone-day holding period, for interest rate risk, equity risk, foreign exchange risk and commodity risk relating to ~~our~~its trading activities.

   Interest
Rate Risk    Foreign
Exchange Risk    Equity
Risk    Commodity
Risk    Less:
Diversification    VaR for Overall
Trading
Activities
   (in millions of Won)
As of December 31, 2015
   ￦ 2,907    ￦ 3,997    ￦ 3,186    ￦ 117    ￦ 5,017    ￦ 5,190
As of December 31, 2016
   3,250    4,396    4,191    152    5,630    6,359
As of December 31, 2017
   4,183    4,750    909    0    4,472    5,370
   Interest
Rate Risk    Foreign
Exchange
Risk    Equity
Risk    Commodity
Risk    Less:
Diversification    VaR for Overall
Trading
Activities
   (in millions of Won)
As of December 31, 2017
   ￦ 4,183    ￦ 4,750    ￦ 909    ￦ 0    ￦ 4,472    ￦ 5,370
As of December 31, 2018
   3,107    4,972    2,353    0    4,445    5,987
As of December 31, 2019
   5,052    5,028    3,730    0    6,233    7,577
In ~~2015, 2016~~2017, 2018 and ~~2017,~~2019, the average, high, low and ending amounts of Woori Bank’s daily VaR relating to ~~our~~its trading activities (at a 99% confidence level for aone-day holding period) were as follows:

As of
December 31,
2015 For the year ended
December 31, 2015 As of
December 31,
2016 For the year ended
December 31, 2016 As of
December 31,
2017 For the year ended
December 31, 2017
Average Maximum Minimum Average Maximum Minimum Average Maximum Minimum As of
December 31,
2017 For the year ended
December 31, 2017 As of
December 31,
2018 For the year ended
December 31, 2018 As of
December 31,
2019 For the year ended
December 31, 2019
Average Minimum Minimum Average Maximum Minimum Average Maximum Minimum
Interest risk
￦ 2,907 ￦ 2,742 ￦ 3,991 ￦ 1,211 ￦3,250 ￦ 2,844 ￦ 6,430 ￦ 1,367 ￦4,183 ￦ 3,799 ￦ 4,918 ￦ 2,467 ￦ 4,183 ￦ 3,799 ￦ 4,918 ￦ 2,467 ￦ 3,107 ￦ 3,702 ￦ 5,528 ￦ 1,730 ￦ 5,052 ￦ 3,406 ￦ 5,725 ￦ 1,176
Foreign exchange risk
3,997 3,415 4,847 2,329 4,396 4,914 7,686 3,967 4,750 5,051 6,636 4,061 4,750 5,051 6,636 4,061 4,972 4,678 6,136 3,439 5,028 5,033 6,469 4,395
Equity risk
3,186 2,411 4,377 531 4,191 3,456 5,063 2,304 909 2,863 4,419 909 909 2,863 4,419 909 2,353 2,669 5,081 1,138 3,730 3,203 5,935 1,146
Commodity risk
117 102 218 5 152 113 325 21 0 31 188 0 0 31 188 0 0 3 24 0 0 1 32 0
Diversification
(5,017 ) (3,858 ) (6,910 ) (411 ) (5,630 ) (5,355 ) (10,385 ) (4,034 ) (4,472 ) (4,621 ) (6,798 ) (2,067 ) (4,472 ) (4,621 ) (6,798 ) (2,067 ) (4,445 ) (4,869 ) (8,155 ) (1,815 ) (6,233 ) (5,127 ) (9,229 ) (2,339 )

Total risk
￦ 5,190 ￦ 4,812 ￦ 6,523 ￦ 3,665 ￦ 6,359 ￦ 5,972 ￦ 9,119 ￦ 3,625 ￦ 5,370 ￦ 7,123 ￦ 9,363 ￦ 5,370 ￦ 5,370 ￦ 7,123 ￦ 9,363 ￦ 5,370 ￦ 5,987 ￦ 6,183 ￦ 8,614 ￦ 4,492 ￦ 7,577 ￦ 6,516 ￦ 8,932 ￦ 4,378

The graph of Woori Bank’s daily 99% VaR relating to ~~our~~its trading activities in ~~2017~~2019 is as follows:

Standardized Method. The standardized method is used to measure the market risk of the positions for which the Financial Supervisory Service has not approved the use of the VaR method. The following table shows ~~the~~Woori Bank’s market risk capital charges measured using the standardized method as of December 31, ~~2015, 2016~~2017, 2018 and ~~2017:~~2019:


	As of December 31,						As of December 31,
	2015		2016		2017		2017		2018		2019
	(in millions of Won)						(in millions of Won)
Risk categories
Interest risk	￦	13,386	￦	11,775	￦	12,468	￦	12,468	￦	9,034	￦	11,671
Equity risk		8,341		4,930		3,367		3,367		7,522		8,188
Foreign exchanges risk		2,991		18,265		19,658		19,658		25,330		32,707
Commodity risk		4,526		3,084		1,204		1,204		0		0

Total	￦	29,244	￦	38,054	￦	36,697	￦	36,697	￦	41,886	￦	52,566

Back-testing. ~~We conduct~~Woori Bank conducts back testing on a daily basis to validate the adequacy of ~~our~~its market risk management. ~~In our back~~Back testing ~~we compare~~compares both the actual and hypothetical profit and loss with VaR calculations and ~~analyze~~analyzes any results that fall outside ~~our~~a predetermined confidence interval of 99%. The number of times the actual changes in ~~our~~Woori Bank’s profit and loss exceeded the VaR amounts in ~~2015, 2016~~2017, 2018 and ~~2017~~2019 was 0.

Stress test. In addition to VaR, ~~we perform~~Woori Bank performs stress testing to measure market risk. As VaR assumes normal market situations, ~~we assess our~~Woori Bank assesses its market risk exposure to abnormal market fluctuations through stress testing. Stress testing is an important way of supporting VaR since VaR is a statistical expression of possible loss under a given confidence level and holding period. It does not cover potential loss if the market moves in a manner that is outside ~~our~~ normal expectations. Stress testing projects the anticipated change in value of holding positions under certain scenarios assuming that ~~we take~~ no action is taken during a stress event to change the risk profile of a portfolio. The following table shows, for Woori Bank, the loss that would have occurred in ~~our~~its trading portfolio as of December 31, ~~2017~~2019 for assumed short-term extreme changes of a +/+/-20% change in the equity market and a +/+/-60 basis point change from interest rates prevailing in the market on that date, under an abnormal stress environment.

   (in billions of Won, except percentages)
Equity Market Chart
Market fluctuation amount
   (20 )% (10 )% (5 )% 5 % 10 % 20 %


   ￦ 10.9 ￦ (4.5 ) ￦ (3.3 ) ￦ 2.4 ￦ 8.1 ￦ 37.6


   (in billions of Won, except basis points)
Interest Rate Chart
Basis point fluctuation amount

(60) basis
points


(40) basis
points

(20) basis
points

20 basis
points

40 basis
points

60 basis
points









   ￦ 0.7    ￦ 0.4    ￦ 0.2    ￦ (0.2 ) ￦ (0.4 ) ￦ (0.7 )








~~Stop loss limits.~~  The Board Risk Management Committee also approves total accumulated loss limits, and the heads of our relevant trading departments set their own stop loss limits with respect to particular types of transactions. We have stop loss limits for various trading activities, including:
~~for trading equity securities in Won, within 25% of the purchase price of such securities;~~
~~for trading fixed income securities in Won, within 5% of the purchase price of such securities;~~
~~for available-for-sale equity securities in Won, within 30% of the purchase price of such securities;~~
~~for available-for-sale fixed income securities in Won, within 10% of the purchase price of such securities;~~
~~for trading equity or fixed income securities in foreign currencies, within 5% of the purchase price of such securities; and~~

~~for available-for-sale equity or fixed income securities in foreign currencies, within 15% of the purchase price of such securities.~~

   (in billions of Won, except percentages)
Equity Market Chart
Market fluctuation amount
   (20 )% (10 )% (5 )% 5 % 10 % 20 %


   ￦ 100.3 ￦ 14.5 ￦ 5.4 ￦ 3.7 ￦ 16.3 ￦ 56.8


   (in billions of Won, except basis points)
Interest Rate Chart
Basis point fluctuation amount

(60) basis
points


(40) basis
points

(20) basis
points

20 basis
points

40 basis
points

60 basis
points









   ￦ 0.5    ￦ 0.3    ￦ 0.2    ￦ (0.2 ) ￦ (0.4 ) ￦ (0.5 )








Interest Rate Risk
Interest rate risk from trading activities arises mainly from our trading ofWon-denominated debt securities. Our general trading strategy is to benefit from short-term movements in the prices of debt securities arising from changes in interest rates. As ~~our~~Woori Bank’s trading accounts aremarked-to-market daily, ~~we manage our~~Woori Bank manages its interest rate risk related to ~~our~~ trading accounts using market value-based tools such as VaR. See “—Asset and Liability Management—Interest Rate Risk.”
Foreign Exchange Risk
Foreign exchange risk arises because we have assets, liabilities andoff-balance sheet items such as foreign exchange forwards and currency swaps that are denominated innon-Won currencies. The difference between each of our relevant subsidiaries’ foreign currency assets and liabilities is offset against forward foreign exchange positions to obtain ~~our~~its net foreign currency open position. ~~We determine the~~Woori Bank determines its maximum foreign exchange exposure for both trading and asset and liability management purposes by establishing a limit for this net foreign currency open position. ~~Our Board~~Woori Bank’s Risk Management Committee also establishes VaR limits for ~~our~~its foreign exchange business.
Assets and liabilities denominated in U.S. dollars account for the majority of our foreign currency assets and liabilities. Those denominated in Japanese yen and the euro account for most of the remainder, the majority of which have been swapped into U.S. dollars.
~~We monitor~~Each of our relevant subsidiaries monitors changes in, and matches of, foreign-currency assets and liabilities in order to reduce exposure to currency fluctuations. WeMost of our foreign exchange risk arises in connection with the operations of Woori Bank. Our relevant subsidiaries also manage risks relating to exchange rate fluctuations through foreign exchange dealing, including by ~~our~~their overseas branches. However, we conduct foreign exchange dealings primarily on behalf of our customers. ~~Counterparties~~Our counterparties are ~~restricted to~~generally domestic and foreign financial institutions and banks with respect to which we have established a foreign exchange dealing limit. We deal primarily in the Won/U.S. dollar market and such dealings are subject to what we believe are conservative daily maximum and closing limits and stop loss limits.banks. The following table sets forth information concerning ~~our~~Woori Bank’s limits on proprietary foreign exchange dealings as of December 31, ~~2017:~~2019:

   Won/U.S. Dollar Dealing    Dealings in other currencies
   Headquarters    Headquarters    Overseas Branches
   Total    Individual    Total    Individual    Total    Individual
   (in millions of US$)
Open position

Daily maximum limit
   US$ 1,000    US$ 200    US$ 200    US$ 50    US$ 60    US$ 15
Daily closing limit
   200    50    100    20    30    6
Stop loss:

Daily
   2    0.5    0.8    0.15    0.24    0.045
Monthly
   3    0.8    2    0.5    0.6    0.15
The following table shows ~~our~~ thenon-consolidated net open positions ~~at the end~~ of ~~2015, 2016~~Woori Bank as of December 31, 2017, 2018 and ~~2017.~~2019. Positive amounts represent long exposures and negative amounts represent short exposures.

   As of December 31,
   2015 2016 2017
   (in millions of US$)
Currency

U.S. dollar
   US$ (14.1 ) US$ (177.4 ) US$ (278.6)
Japanese yen
   (72.2 ) (8.4 ) (22.6 )
Euro
   (7.9 ) (76.9 ) (266.6 )
Others
   (37.1 ) 138.3 148.9


Total
   US$ (131.3 ) US$ (124.4 ) US$ (418.9 )

   As of December 31,
   2017 2018 2019
   (in millions of US$)
Currency

U.S. dollar
   US$ (278.6 ) US$ 153.8 US$ 171.1
Japanese yen
   (22.6 ) (4.5 ) (38.7 )
Euro
   (266.6 ) (399.1 ) (400.8 )
Others
   148.9 146.0 182.3


Total
   US$ (418.9 ) US$ (103.8 ) US$ (86.1 )


Equity Risk
Equity price risk and equity volatility risk ~~result~~arise primarily from ~~our~~Woori Bank’s equity portfolio, which consists mainly of futures contracts and options andWon-denominated equity securities, as a result our imposition of ~~the~~ strict ~~limits we have imposed with respect to~~ VaR ~~and~~limits, accumulated loss limits and stress test ~~limits. Equity~~limits.Equity risk arises in the context of trading activities for our own accounts to realize short-term trading profits with respect to equity securities and trading activities involving certain derivatives transactions.
Commodity Risk ~~Risk~~
Commodity risk represents exposures to instruments traded in the metals, petroleum, natural gas and other commodities markets, and arises principally from ~~our~~Woori Bank’s trading of U.S. dollar-denominated commodity derivatives. ~~We manage our~~Woori Bank manages its commodity risk using VaR, accumulated loss and stress test limits.
Derivatives-Related Market Risk
The Foreign Exchange Transaction Regulations of Korea provide that a foreign exchange bank (such as ~~us)~~Woori Bank) may generally enter into derivatives transactions without restriction so long as those transactions are not linked with credit risks of a party to the transaction or any third party. If they are, wethe bank must report the transaction to the Bank of Korea.
Most of the derivatives products that weour subsidiaries trade are on behalf of ~~our~~their customers or to hedge ~~our~~their own positions. Our derivatives activities include interest rate and cross-currency swaps, foreign exchange forwards, stock index and interest rate futures, forward rate agreements and currency andover-the-counter equity options.
Asset and Liability Management
Our principal market risk with respect to managing our assets and liabilities is interest rate risk. Interest rate risk arises due to mismatches in the maturities orre-pricing periods of rate-sensitive assets and liabilities, such as loans and deposits. Any imbalance of the maturity of our interest rate-sensitive assets and liabilities and the gap resulting from that imbalance may cause net interest income to be affected by changes in the prevailing level of interest rates. Our principal asset and liability management objectives are to generate stable net interest revenues and protect our asset value against interest rate fluctuations.
~~We use~~Woori Bank uses a standardized asset and liability management system for ~~our~~ itsWon- and foreign currency-denominated assets and liabilities. In addition, ~~our~~Woori Bank’s system also allows usit to manage the assets and liabilities in ~~our~~its trust accounts. ~~Our~~Its system uses the historical scenario method to determine interest rate VaR, supplemented by modules to calculate and monitor our liquidity coverage ratio and net stable funding ratio.
Interest Rate Risk
We manage interest rate risk based on rational interest rate forecasts, using gap analysis to measure the difference between interest-sensitive assets and interest-sensitive liabilities, and using simulations to calculate the effect of changing interest rates on income. We principally manage this risk by managing maturity and duration gaps between our interest-earning assets and interest-bearing liabilities.

We measure interest rate risk for Won and foreign currency assets and liabilities, including derivatives and principal guaranteed trust accounts. Most of our interest-earning assets and interest-bearing liabilities are denominated in Won and our foreign currency-denominated assets and liabilities are mostly denominated in U.S. dollars. We believe, however, that our interest rate sensitivity is limited with respect to ourWon-denominated assets. Deposits in Won generally bear fixed rates of interest for fixed time periods (other than deposits payable on demand which constituted approximately ~~45.7%~~44.5% of our total deposits in Won as of December 31, ~~2017)~~2019). We generally adjust the interest rates on these deposits when they are rolled over. In addition, as of December 31, ~~2017, 97.6%~~2019, 98.3% of those deposits had current maturities of one year or less. As of December 31, ~~2017,~~2019, approximately ~~65.4%~~58.7% of ourWon-denominated loans bore floating rates of interest, and ~~54.4%~~66.9% of those loans had current maturities of one year or less.

Interest rate gap analysis measures expected changes in net interest revenues by calculating the difference in the amounts of interest-earning assets and interest-bearing liabilities at each maturity and interest resetting date. ~~We perform~~Woori Bank performs interest rate gap analysis for Won and foreign currency-denominated assets on a monthly basis.

Interest Rate Gap Analysis. For interest rate gap analysis we use or assume the following maturities for different assets and liabilities:

With respect to maturities of assets, for prime rate-linked loans, we apply the actual maturities of each loan; furthermore, we assume the reserves with the Bank of Korea and loans and securities classified as substandard or below to have maximum remaining maturities.

With respect to maturities of liabilities, for demand deposits with no fixed maturities, a portion of the demand deposits are recognized to have maturities of less than three months as calculated in accordance with Financial Services Commission guidelines.

Our Board Risk Management Committee’s interest rate risk limit for Woori Bank generally requires that ~~our~~its earnings at risk forWon-denominated accounts be within 10% of ~~our~~its estimated net interest income for aone-year period. We calculate VaR through our standardized asset and liability management system, which uses the historical scenario method to simulate the current portfolio’s net asset value for aone-year holding period at a 99.9% confidence level.

The following tables show, for Woori Bank, on anon-consolidated basis pursuant to the guidelines of the Financial Supervisory Service, the interest rate gap for ~~our~~ Won-denominated accounts and foreign currency-denominated accounts as of December 31, ~~2017:~~2019:

As of December 31, 2017
0-3 Months 3-6 Months 6-12 Months 1-3 Years Over 3 Years Total
(in billions of Won, except percentages)
Won-denominated accounts:

Interest rate-sensitive assets

Free interest rate
￦ 11,326 ￦ 7,793 ￦ 9,649 ￦ 20,927 ￦ 21,113 ￦ 70,808
Market interest rate
119,845 33,779 8,922 11,109 3,389 177,044
Interest rate pegged to customer deposit
56 47 68 10 1 182

Total
￦ 131,227 ￦ 41,619 ￦ 18,639 ￦ 32,046 ￦ 24,503 ￦ 248,034

Interest rate-sensitive liabilities

Free interest rate
￦ 23,918 ￦ 7,954 ￦ 8,664 ￦ 14,999 ￦ 13,737 ￦ 69,272
Market interest rate
59,259 22,552 34,306 350 41,375 157,842

Total
￦ 83,177 ￦ 30,506 ￦ 42,970 ￦ 15,349 ￦ 55,112 ￦ 227,114

Sensitivity gap
48,050 11,113 (24,331 ) 16,697 (30,609 ) 20,920
Cumulative gap
48,050 59,163 34,832 51,529 20,920 20,920
% of total assets⁽¹⁾
18.02 22.19 13.06 19.32 7.84 7.84
Total assets in Won
￦ 266,680


																			As of December 31, 2019
																			0-3 Months			3-6 Months			6-12 Months			1-3 Years			Over 3 Years			Total
																			(in billions of Won, except percentages)
Won-denominated accounts:
Interest rate-sensitive assets
Free interest rate																			￦	17,552		￦	15,255		￦	15,661		￦	21,316		￦	20,387		￦	90,171
Market interest rate																				103,270			34,749			11,631			21,918			11,332			182,900
Interest rate pegged to customer deposit																				158			92			161			32			14			457

Total																			￦	120,980		￦	50,096		￦	27,453		￦	43,266		￦	31,733		￦	273,528

Interest rate-sensitive liabilities
Free interest rate																			￦	25,498		￦	4,531		￦	7,792		￦	23,565		��	21,493		￦	82,879
Market interest rate																				77,275			34,272			47,530			10,471			4,719			174,267

Total																			￦	102,773		￦	38,803		￦	55,322		￦	34,036		￦	26,212		￦	257,146

Sensitivity gap																				18,207			11,293			(27,869	)		9,230			5,521			16,382
Cumulative gap																				18,207			29,500			1,631			10,861			16,382			16,382
% of total assets⁽¹⁾																				6.09			9.86			0.55			3.63			5.48			5.48
Total assets in Won																																		￦	299,076

	As of December 31, 2017																		As of December 31, 2019
	0-3 Months			3-6 Months			6-12 Months			1-3 Years			Over 3 Years			Total			0-3 Months			3-6 Months			6-12 Months			1-3 Years			Over 3 Years			Total
	(in millions of US$, except percentages)																		(in millions of US$, except percentages)
Foreign currency-denominated accounts:
Interest rate-sensitive assets
Free interest rate	US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	0
Market interest rate		16,504			1,960			371			1,118			315			20,268			15,626			2,225			370			569			880			19,670
Interest rate pegged to customer deposit		0			0			0			0			0			0			0			0			0			0			0			0

Total	US$	16,504		US$	1,960		US$	371		US$	1,118		US$	315		US$	20,268		US$	15,626		US$	2,225		US$	370		US$	569		US$	880		US$	19,670

Interest rate-sensitive liabilities
Free interest rate	US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	0		US$	38		US$	38
Market interest rate		9,855			825			940			980			3,104			15,704			8,868			2,487			1,725			2,401			2,632			18,113

Total	US$	9,855		US$	825		US$	940		US$	980		US$	3,104		US$	15,704		US$	8,868		US$	2,487		US$	1,725		US$	2,401		US$	2,670		US$	18,151

Sensitivity gap		6,649			1,135			(569	)		138			(2,789	)		4,564			6,758			(262	)		(1,355	)		(1,832	)		(1,790	)		1,519
Cumulative gap		6,649			7,784			7,215			7,353			4,564			4,564			6,758			6,496			5,141			3,309			1,519			1,519
% of total assets⁽¹⁾		23.70	%		27.74	%		25.72	%		26.21	%		16.27	%		16.27	%		23.38	%		22.47	%		17.79	%		11.45	%		5.26	%		5.26	%
Total assets in US$																US$	28,054																	US$	28,904

⁽¹⁾	Represents the cumulative gap as a percentage of total assets.

Duration Gap Analysis. WeWoori Bank also ~~perform~~performs a duration gap analysis to measure and manage ~~our~~its interest rate risk. Duration gap analysis is a more long-term risk indicator than interest rate gap analysis, as interest rate gap analysis focuses only on accounting income and not on the market value of the assets and liabilities. We emphasize duration gap analysis because, in the long run, our principal concern with respect to interest rate fluctuations is the net asset value rather than net interest revenue changes.

For duration gap analysis, we use or assume the same maturities for different assets and liabilities that we use or assume for our interest rate gap analysis.

The following table shows, for Woori Bank, with respect to ~~our~~ Won-denominated assets and liabilities, duration gaps and net asset value changes when the interest rate increases by one percentage point as of the specified dates:

Date
   Interest-bearing
asset duration    Interest-bearing
liability duration    Total asset/liability
duration gap    Net asset value change
   (in years)    (in years)    (in years)    (in billions of Won)
June 30, 2015
   0.92    0.75    0.23    529
December 31, 2015
   0.91    0.77    0.21    505
June 30, 2016
   0.93    0.76    0.24    618
December 31, 2016
   0.85    0.74    0.17    423
June 30, 2017
   0.84    0.78    0.12    292
December 31, 2017
   0.82    0.78    0.11    259
Date
   Interest-bearing
asset duration    Interest-bearing
liability duration    Total asset/liability
duration gap    Net asset value change
   (in years)    (in years)    (in years)    (in billions of Won)
June 30, 2017
   0.84    0.78    0.12    292
December 31, 2017
   0.82    0.78    0.11    259
June 30, 2018
   0.77    0.80    0.03    83
December 31, 2018
   0.84    0.80    0.10    276
June 30, 2019
   0.90    0.81    0.15    415
December 31, 2019
   0.94    0.88    0.14    392
We set interest rate risk limits using the historical simulation method, which uses actual historical price, volatility and yield changes in comparison with the current position to generate hypothetical portfolios and calculate a distribution of position and portfolio market value changes. The following table shows ~~our~~Woori Bank’s interest rate VaR with respect to ~~our~~ itsWon-denominated assets and liabilities for each of the quarters since the fourth quarter of ~~2016:~~2018:

   Fourth Quarter
2016    First Quarter
2017    Second Quarter
2017    Third Quarter
2017    Fourth Quarter
2017
   (in billions of Won, except percentages)
Interest rate VaR
   ￦ 237.6    ￦ 335.0    ￦ 354.6    ￦ 372.0    ￦ 394.5

   Fourth Quarter
2018    First Quarter
2019    Second Quarter
2019    Third Quarter
2019    Fourth Quarter
2019
   (in billions of Won, except percentages)
Interest rate VaR
   ￦ 293.2    ￦ 273.2    ￦ 417.3    ￦ 454.4    ￦ 386.4
~~Gap~~The Board Risk Management Committee reviews gap analysis reports, duration gap analysis reports and interest rate limit compliance reports prepared by ~~our risk management groups are reviewed by our Executive~~the Risk Management ~~Committee on a monthly basis and submitted to the Board Risk Management Committee~~Department on a quarterly basis.
Foreign Exchange Risk
We manage foreign exchange rate risk arising in connection with the management of our assets and liabilities together with such risks arising from our trading operations. See “—Market Risk Management for Trading Activities—Foreign Exchange Risk” above.
Liquidity Risk Management
Liquidity risk is the risk of insolvency or loss due to disparity between inflow and outflow of funds such as maturity mismatch, including having to obtain funds at a high price or to dispose of securities at an unfavorable price due to lack of available funds. We manage our liquidity in order to meet our financial liabilities from withdrawals of deposits, redemption of matured debentures and repayments at maturity of borrowed funds. We also require sufficient liquidity to fund loans and extend other forms of credits, as well as to make investments in securities. ~~Our Board~~Each of the Subsidiary Risk Management ~~Committee~~Committees establishes liquidity policies for the respective subsidiary and monitors liquidity on anon-going basis. WeOur relevant subsidiaries make constant ~~adjustment~~adjustments to take into account variables affecting ~~our~~their liquidity levels. ~~Our risk management groups~~The Subsidiary Risk Management Departments review the uses and sources of funds on a daily basis, taking into consideration the various goals of ~~our~~their respective business groups.
Our liquidity management goal is to be able, even under adverse conditions, to meet all our liability repayments on time and fund all investment ~~opportunities.~~opportunities even under adverse conditions.
We maintain diverse sources of liquidity to facilitate flexibility in meeting our funding requirements. We fund our operations principally by accepting deposits from retail and corporate depositors, accessing the call loan market (a short-term market for loans with maturities of less than one month), issuing debentures and borrowing from the Bank of Korea. We use the majority of funds raised by us to extend loans or purchase securities. Generally, deposits are of shorter average maturity than loans or investments.
In managing liquidity risk, ~~we determine~~each of our relevant subsidiaries currently determines gap limits, ~~implement~~implements those limits and ~~monitor~~monitors maturity gaps using ~~our~~its asset and liability management system. We also establish gap limits for liquidity management purposes. ~~Our~~Each relevant subsidiary has set a total limit in order to manage liquidity risk. For example, Woori Bank’s three-month accumulated gap limits for banking and trust accounts are between (10)% and 10%. In the foreign currency account, the limit for aone-week gap has been set as (3)% or higher and as (10)% or higher for aone-month gap.
Liquidity is maintained by holding sufficient quantities of assets that can be liquidated to meet actual or potential demands for funds from depositors and others. Liquidity is also managed by ensuring that the excess of maturing liabilities over maturing assets in any period is kept to manageable levels relative to the amount of funds we believe we can raise when required. We seek to minimize our liquidity costs by managing our liquidity position on a daily basis and by limiting the amount of cash at any time that is not invested in interest-earning assets or securities.
The Financial Services Commission uses the liquidity coverage ratio, defined as the ratio of highly liquid assets to total net cash outflows over a30-day period, as the principal liquidity risk management measure and currently requires ~~each~~ Korean ~~bank~~banks, including Woori Bank, to:

maintain a liquidity coverage ratio of not less than ~~95% from January 1, 2018 to December 31, 2018, subject to certain exceptions, with such minimum liquidity coverage ratio to increase to~~ 100% ~~in 2019;~~;

maintain a foreign currency liquidity coverage ratio of not less than 80% (temporarily reduced to 70% ~~from January 1, 2018 until December 31, 2018, with such minimum~~for the three months ending May 30, 2020 for purposes of increasing foreign currency liquidity ~~coverage ratio to increase to 80%~~ in ~~2019; provided, however, that~~ the foreign currency liquidity ratio (defined as the ratio of foreign currency assets due within three months to foreign currency liabilities due within three months) would apply if the amount of foreign currency assetsKorean financial markets); and ~~the ratio of foreign currency liabilities to total liabilities are less than the respective amount and ratio specified under the Bank Act and the regulations thereunder; and~~

submit monthly reports with respect to the maintenance of these ratios.
As of December 31, ~~2017, our~~ 2019, Woori Bank’s30-day liquidity coverage ratio was ~~100.87%~~107.21%, above the Financial Services Commission’s standard of ~~95%~~100%.
The following table shows the liquidity status, on a cumulative basis, and limits for ~~our~~ foreign currency accounts of Woori Bank on anon-consolidated basis as of December 31, ~~2017~~2019 in accordance with the Financial Services Commission’s regulations:

   7 days or less 8 days –1 month 3 months or less    7 days or less 8 days – 1 month 3 months or less
   (in millions of US$)    (in millions of US$)
Foreign currency accounts:

Foreign currency assets
   US$ 14,366 US$ 14,508 US$ 44,022    US$ 16,576 US$ 15,875 US$ 15,134
Foreign currency liabilities
   10,468 15,106 38,990    9,571 15,470 17,087
Maturity gap
   3,898 -598 5,032    7,005 405 (1,953 )
Cumulative gap (A)
   3,898 3,300 5,032    7,005 7,410 5,457
Total assets (B)
   97,532 97,532 97,532    135,697 135,697 135,697
Liquidity gap ratio (A/B)
   4.00 % 3.38 % 112.91 %⁽¹⁾    5.16 % 5.46 % 112.95 %⁽¹⁾
Limits
   (3 )% (10 )% 85 %    (3 )% (10 )% 85 %

⁽¹⁾
Liquidity ratio, calculated as foreign currency assets as a percentage of foreign currency liabilities.
~~Our Executive~~The Subsidiary Risk Management ~~Committee receives~~Committees receive reports from the relevant subsidiaries regarding ~~our~~their respective liquidity ratios and liquidity gap ratios on a monthly basis. Based on those reports, ~~our~~each Subsidiary Risk Management Department reports these results to the Board Risk Management Committee on a quarterly basis.
Operational Risk Management
Operational risk is difficult to quantify and subject to different definitions. We define our operational risk as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk.
To monitor and control operational risks, we maintain a system of comprehensive policies and have put in place a control framework designed to provide a stable and well-managed operational environment throughout our
organization. Several bodies are responsible for managing our operational risk, including our ~~compliance department,~~Audit and Legal and Compliance Departments and the Subsidiary Risk Management ~~Committee~~Committees and ~~the risk management group. In order to manage operational risk, we have~~their respective Subsidiary Risk Management Departments. For example, Woori Bank has implemented a multi-step operational risk management process consisting of engaging in risk self-assessment, establishing key risk indicators, operating an early warning system, managing loss data, measuring operational risk capital, monitoring and reporting risks, promoting a strong risk management culture and developing action plans. ~~We have~~Woori Bank has also established policies to change operational risk profiling, select permitted levels of risk, develop action plans and manage results.
We consider legal risk as a part of our operational risk. The uncertainty of the enforceability of the obligations of our customers and counterparties, including foreclosure on collateral, creates legal risk. Legal risk is higher in new areas of business where the law is often untested in the courts although such risk can also increase in our traditional business to the extent that the legal and regulatory landscape in Korea is changing and many new laws and regulations governing the banking industry remain untested. Our relevant subsidiaries’ legal ~~department seeks~~departments seek to minimize legal risk by using stringent legal documentation, employing procedures designed to ensure that transactions are properly authorized and consulting legal advisers. ~~Our~~Each of our relevant subsidiaries’ internal auditors also review loan documentation to ensure that these are correctly drawn up to withstand scrutiny in court should such scrutiny occur.
In connection with our disaster recovery capabilities, ~~we are~~Woori Bank has measures in ~~the process of meeting the guidelines suggested by the Financial Services Commission. These generally require that our disaster and recovery capabilities enable us~~place to recover data and resume core operations within three ~~hours.~~hours of any business interruption.
The majority of our information technology systems are operated by our subsidiary, Woori FIS. We currently have a “mirror site” in operation with respect to Woori Bank which backs up transaction information on a real-time basis. We also
have a ~~“back-up~~“back-up site” in operation with respect to Woori Bank, which backs up transaction information on a daily basis. See “Item 3.D. Risk Factors—Other risks relating to our business—WeOur operations may ~~experience disruptions, delays~~be subject to increasing and continually evolvingcybersecurity and other ~~difficulties from our information technology systems.~~technological risks.”

Item 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Fees and Charges
Under the terms of the deposit agreement, as a holder of our ADSs, you are required to pay the following service fees to the depositary:

Services

Fees
Issuance of ADSs
   Up to $0.05 per ADS issued
~~Surrender~~Cancellation of ADSs
   Up to $0.05 per ADS ~~surrendered~~cancelled
Distribution of cash dividends or other cash distributions
   Up to $0.05 per ADS held
Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of the rights to purchase additional ADSs
   Up to $0.05 per ADS held
Distribution of securities other than ADSs or rights to purchase additional ADSs
   Up to $0.05 per ADS held
~~Depositary Services~~ADS services
   Up to $0.05 per ADS held on the applicable record date established by the depositary
As a holder of our ADSs, you are also responsible for paying certain fees and expenses ~~incurred by the depositary and certain taxes and governmental charges~~ such as:
taxes (including applicable interest and penalties) and other governmental charges;

• ~~Fees~~
fees for the transfer and registration of shares charged by the registrar and transfer agent for the shares in Korea (i.e., upon deposit and withdrawal of shares).
cable, telex and facsimile transmission and delivery expenses;
~~Expenses incurred for converting foreign currency into U.S. dollars.~~

~~Fees~~
expenses and charges incurred in the conversion of foreign currency;
fees and expenses incurred in connection with compliance with exchange control regulations and other applicable regulatory ~~requirements.~~requirements; and

~~Expenses for cable, telex and fax transmissions and for delivery of securities.~~
~~Taxes and duties upon the transfer of securities (i.e., when shares are deposited or withdrawn from deposit).~~
~~Fees~~fees and expenses incurred in connection with the delivery or servicing of shares on deposit.
Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary by the brokers (on behalf of their clients) receiving the newly issued ADSs from the depositary and by the brokers (on behalf of their clients) delivering the ADSs to the depositary for cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary to the holders of record of ADSs as of the applicable ADS record date.
The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of distributions other than cash (i.e., stock dividend, rights), the depositary charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in direct registration), the depositary sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via the Depository Trust Company, or DTC), the depositary generally collects its fees through the systems provided by
DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to the depositary.
In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to such holder of ADSs.
Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. You will receive prior notice of such changes.
Fees and Payments from the Depositary to Us
In ~~2017,~~2019, pursuant to an agreement with us, the depositary waived, or made payments to third parties of, approximately ~~$17,815~~$9,976 (net of applicable taxes) in the aggregate in connection with proxy process expenses (including printing, postage and distribution expenses), contributions towards investor relations efforts (including investor relations agency fees) and other standardout-of-pocket maintenance costs relating to our ADS facility that were payable by us.
In addition, as part of its service to us, the depositary waives its fees for the standard costs and operating expenses associated with the administration of the ADS facility.

Item 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not Applicable

Item 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not Applicable

Item 15.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We have evaluated, with the participation of our chief executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures, as such term is defined in Rules13a-15(e) and15d-15(e)
under the Exchange Act, as of December 31, ~~2017.~~2019. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures as of December 31, ~~2017~~2019 were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements in accordance with IFRS as issued by the IASB. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation and may
not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance with management’s authorization, assets are safeguarded, and financial records are reliable. Our management also takes steps to ensure that information and communication flows are effective and to monitor performance, including performance of internal control procedures.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2017~~2019 based on the criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission in May 2013.
Based on this assessment, management believes that, as of December 31, ~~2017,~~2019, our internal control over financial reporting is effective.
The effectiveness of our internal control over financial reporting as of December 31, ~~2017~~2019 has been audited by Deloitte Anjin LLC, an independent registered public accounting firm, as stated in its report included herein which expressed an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, ~~2017.~~2019.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during ~~2017~~2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We adopted IFRS 16 effective January 1, 2019 and have updated or modified certain internal controls over financial reporting as a result of the new accounting standard. For additional information regarding IFRS 16 and the impact of its application to our consolidated financial statements, see Note2-(1)-1) of the notes to our consolidated financial statements included elsewhere in this annual report.

Item 16.
RESERVED

Item 16A. ~~Audit Committee Financial Expert~~
AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that each ofDong-Woo Chang, Chan-Hyoung Chung and ~~Sang-Hoon Shin,~~Sung-Tae Ro, our outside directors and members of our Audit Committee, qualifies as an “audit committee financial expert” and is independent within the meaning of this Item 16A.
Item 16B. ~~Code of Ethics~~
CODE OF ETHICS
We have adopted a code of ethics, as defined in Item 16B of Form20-F under the Exchange Act. Our code of ethics applies to our chief executive officer, principal financial officer and persons performing similar functions as well as to our outside directors and other officers and employees. Our code of ethics is available on our website at~~http:~~https://~~www.wooribank.com~~www.woorifg.com. If we amend the provisions of our code of ethics that apply to our chief executive officer and principal financial officer and persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website at the same address.

Item 16C.
~~Principal Accountant Fees and Services~~PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the fees billed to us by our independent registered public accountants, Deloitte Anjin LLC, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates (which we refer to collectively as Deloitte), during the fiscal years ended December 31, ~~2015, 2016~~2017, 2018 and ~~2017:~~2019:

   Year ended December 31,
       2015            2016            2017
   (in millions of Won)
Audit fees
   ￦ 3,272    ￦ 3,405    ￦ 3,590
Audit-related fees
   202    121    —
Tax fees
   163    170    169
All other fees
   —    —    —






Total fees
   ￦ 3,637    ￦ 3,696    ￦ 3,496






   Year ended December 31,
       2017            2018            2019
   (in millions of Won)
Audit fees
   ￦ 3,590    ￦ 4,173    ￦ 6,115
Audit-related fees
   —    157    178
Tax fees
   169    195    338
All other fees
   —    53    125






Total fees
   ￦ 3,759    ￦ 4,578    ￦ 6,756






Audit fees in the above table are the aggregate fees billed or expected to be billed by Deloitte in connection with the audit of our annual financial statements, the review of our interim financial statements, the review of filings with the U.S. Securities and Exchange Commission and audit of the effectiveness of our internal control over financial reporting.
Audit-related fees in the above table are the aggregate fees billed or expected to be billed by Deloitte for ~~agreed upon~~agreed-upon procedures related to the issuance of comfort letters in connection with the issuance of debt securities.
Tax fees in the above table are fees billed or expected to be billed by Deloitte for assistance in the preparation of certain tax returns and other tax advice.
Audit CommitteePre-Approval Policies and Procedures
Our Audit Committeepre-approves all audit services to be provided by ~~Deloitte Anjin LLC,~~ our independent auditors. Our Audit Committee’s policy regarding thepre-approval ofnon-audit services to be provided to us by our independent auditors is that all such services shall bepre-approved by our Audit Committee.Non-audit services that are prohibited to be provided to us by our independent auditors under the rules of the SEC and applicable law may not bepre-approved. In addition, prior to the granting of anypre-approval, our Audit Committee must be satisfied that the performance of the services in question will not compromise the independence of our independent auditors. Our Audit Committee alsopre-approves the selection or replacement of the independent auditors of our subsidiaries.
Our Audit Committee did not ~~pre-approve~~approve anynon-audit services under thede minimis exception of Rule~~Rule~~ 2-01(c)(7)(i)(C) of RegulationS-X as promulgated by the U.S. Securities and Exchange Commission.

Item 16D. ~~Exemptions from the Listing Standards for Audit Committees~~
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not Applicable
Item 16E. ~~Purchase of Equity Securities by the Issuer and Affiliated Purchasers~~
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
~~Neither~~Except as described below, neither we nor any “affiliated purchaser,” as defined in Rule10b-18(a)(3) of the Exchange Act, purchased any of our equity securities during the period covered by this annual report.
In connection with the “comprehensive stock transfer” pursuant to which we were established as a new financial holding company in January 2019, the shareholders of Woori Bank were entitled to exercise appraisal rights with respect to its common stock held by them, at a purchase price of ￦16,079 per share, in accordance with Korean law. The period for exercise of appraisal rights started on December 28, 2018 and ended on January 7, 2019, during which such shareholders exercised appraisal rights with respect to an aggregate of 11,453,702 shares of common stock of Woori Bank. The payment of the purchase price for such common stock held by the exercising shareholders was made by Woori Bank on January 9, 2019, in the aggregate amount of ￦184 billion. Such shares of Woori Bank common stock were exchanged for shares of our common stock in the stock transfer and subsequently sold to institutional investors in a block trade in March 2019. See “Item 4.A. History and Development of the Company—Establishment of Woori Financial Group.”
In September 2019, Woori Bank acquired 42,103,377 shares of our common stock in connection with the “comprehensive stock exchange,” pursuant to which Woori Card became our direct and wholly-owned subsidiary. In connection with the stock exchange, Woori Bank transferred all of its Woori Card shares to us and in return received 42,103,377 shares of our common stock and ￦598 billion based on an exchange ratio of 0.4697442:1. Woori Bank sold 28,890,707 of such shares to Fubon Life Insurance Co., Ltd. in September 2019 and 13,212,670 of such shares in block trades in November 2019. See “Item 4.A. History and Development of the Company—Establishment of Woori Financial Group—Reorganization and Expansion of Woori Financial Group.”

Item 16F. ~~Change in Registrant’s Certifying Accountant~~
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
~~Not Applicable~~On January 13, 2020, our Audit Committee approved the appointment of Samil PricewaterhouseCoopers, or PwC, as our principal accountant to audit our consolidated financial statements prepared in accordance with IFRS as issued by the IASB for the fiscal years ending December 31, 2020, 2021 and 2022, and, in effect, dismissed Deloitte Anjin LLC, our independent registered public accountants for the fiscal year ending December 31, 2019. PwC’s appointment was effective as of January 16, 2020, and Deloitte’s dismissal was effective as of April 29, 2020, the date of completion of its audit of our financial statements for the fiscal year ending December 31, 2019 and the issuance of its report thereon.
In connection with our establishment in January 2019, the Financial Services Commission designated Deloitte as our external auditor for aone-year term in accordance with the requirements for newly-listed companies under the Act on External Audit of Stock Companies in March 2019. Following suchone-year term, such companies may either appoint an external auditor of its choice, which must be different from the previous auditor, or request designation of an external auditor by the Financial Services Commission, for a three-year term in each case. We requested the designation of an external auditor by the Financial Services Commission, which designated PwC as our external auditor.
During the two years prior to December 31, 2019 and up until April 29, 2020, or thePre-Engagement Period, (1) Deloitte has not issued any reports on our financial statements or on the effectiveness of internal control over financial reporting that contained an adverse opinion or a disclaimer of opinion, nor were the auditor’s reports of Deloitte qualified or modified as to uncertainty, audit scope, or accounting principles, (2) there has not been any disagreement over any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to Deloitte’s satisfaction would have caused it to make reference to the subject matter of the disagreement in connection with its auditors’ reports, or any “reportable event” as described in Item 16F(a)(1)(v) of Form20-F.
During thePre-Engagement Period, neither we nor anyone on our behalf consulted PwC regarding either (i) the application of IFRS as issued by the IASB to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements (and neither a written report nor oral advice was provided to us that PwC concluded was an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue under IFRS as issued by the IASB) or (ii) any matter that was either the subject of a “disagreement” (as defined in Item 16F(a)(1)(iv) of Form20-F and the related instructions to Item 16F) or a “reportable event” (as described in Item 16F(a)(1)(v) of Form20-F).
We provided a copy of the disclosure in this Item 16F to Deloitte and requested that Deloitte furnish us with a letter addressed to the Commission stating whether it agrees with such disclosure, and if it does not agree, stating the respects in which it does not agree. A copy of Deloitte’s letter dated April 29, 2020 is filed as Exhibit 15.1 to this annual report on Form20-F for the fiscal year ended December 31, 2019.

Item 16G. ~~Corporate Governance~~
CORPORATE GOVERNANCE
Differences in Corporate Governance Practices
Pursuant to the rules of the New York Stock Exchange applicable to foreign private issuers like us that are listed on the New York Stock Exchange, we are required to disclose significant differences between the New York Stock Exchange’s corporate governance standards and those that we follow under Korean law. The following is a summary of such significant differences.

NYSE Corporate Governance Standards    Woori ~~Bank~~Financial Group
Director Independence
Listed companies must have a majority of independent directors.    The majority of our board of directors is independent (as defined in accordance with the New York Stock Exchange’s standards), as ~~five~~six of our ~~eight~~nine directors are outside directors.
Executive Session
Non-management directors must meet in regularly scheduled executive sessions without management. ~~Our outside directors hold quarterly meetings, which coincide with the quarterly Audit Committee~~
Independent directors should meet alone in an executive session at least once a year.    Our outside directors hold quarterly meetings, which coincide with the quarterly Audit Committee meetings, to discuss matters relating to management issues. The Audit Committee consists of ~~two~~three outside ~~directors and one standing director.~~directors.
Nomination/Corporate Governance Committee
A nomination/corporate governance committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities (including development of corporate governance guidelines) and annual performance evaluation of the committee.    We have established a ~~separate Board of Directors Management~~ Committee for Recommending Executive Officer Candidates, which consists of ~~one standing director, one non-standing director and five~~six outside directors.
Compensation Committee
A compensation committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities and annual performance evaluation of the committee. The charter must be made available on the company’s website. In addition, in accordance with the SEC rules adopted pursuant to Section 952 of the Dodd-Frank Act, NYSE listing standards were amended to expand the factors relevant in determining whether a committee member has a relationship to the company that will materially affect that member’s duties to the compensation committee.

Additionally, the committee may obtain or retain the advice of a compensation adviser only after taking into consideration all factors relevant to determining that adviser’s independence from management.
   We ~~maintain~~have established a Compensation Committee consisting of onenon-standing director and ~~five outside~~sixoutside directors.
Audit Committee
Listed companies must have an audit committee that satisfies the independence and other requirements of Rule10A-3 under the Exchange Act. All members must be independent. The committee must have a charter addressing the committee’s purpose, an annual performance evaluation of the committee, and the duties and responsibilities of the committee. The charter must be made available on the company’s website.    We ~~maintain~~have established an Audit Committee ~~comprised~~consisting of ~~two~~three outside directors, ~~and one standing director,~~ all of whom are independent. Accordingly, we are in compliance with Rule10A-3 under the Exchange Act.
Audit Committee Additional Requirements
Listed companies must have an audit committee that is composed of at least three directors.    Our Audit Committee has three members, as described above.
Shareholder Approval of Equity Compensation Plan
Listed companies must allow its shareholders to exercise their voting rights with respect to any material revision to the company’s equity compensation plan.    We currently have one equity compensation plan, providing for the grant of stock options to officers and directors.
   All material matters related to the granting of stock options are provided in our articles of incorporation, and any amendments to the articles of incorporation are subject to shareholders’ approval.
Corporate Governance Guidelines
Listed companies must adopt and disclose corporate governance guidelines.    We have adopted corporate governance standards, the Korean-language version of which is available on our website.
Code of Business Conduct and Ethics
Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.    We have adopted a Code of Ethics and Business Conduct for Employees, the Korean-language version of which is available on our website.

Item 16H.
~~Mine Safety Disclosure~~MINE SAFETY DISCLOSURE
Not Applicable

Item 17.
FINANCIAL STATEMENTS
Not Applicable

Item 18.
FINANCIAL STATEMENTS
Reference is made to Item 19(a) for a list of all financial statements filed as part of this annual report.
Item 19.
EXHIBITS
(a)
~~Item 19. EXHIBITS~~
~~(a)~~ List of financial statements:

   Page
Audited consolidated financial statements of Woori ~~Bank~~Financial Group Inc. (successor issuer of Woori Bank) and subsidiaries prepared in accordance with IFRS as issued by the IASB

Report of Independent Registered Public Accounting Firm
   F-1
Consolidated Statements of Financial Position as of December 31, ~~2016~~2018 and ~~2017~~2019
   ~~F-3~~F-4
Consolidated Statements of Comprehensive Income for the Years Ended December 31, ~~2015, 2016~~2017, 2018 and ~~2017~~2019
   ~~F-4~~F-6
Consolidated Statements of Changes in Equity for the Years Ended December 31, ~~2015, 2016~~2017, 2018 and ~~2017~~2019
   ~~F-5~~F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, ~~2015, 2016~~2017, 2018 and ~~2017~~2019
   ~~F-7~~F-11
Notes to Consolidated Financial Statements
   ~~F-9~~F-14
(b)
Exhibits
Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission, we have filed certain agreements as exhibits to this Annual Report on Form20-F. These agreements may contain representations and warranties made by the parties. These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and (i) may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties to such agreements if those statements turn out to be inaccurate, (ii) may have been qualified by disclosures that were made to such other party or parties and that either have been reflected in the company’s filings or are not required to be disclosed in those filings, (iii) may apply materiality standards different from what may be viewed as material to investors and (iv) were made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent developments. Accordingly, these representations and warranties may not describe our actual state of affairs at the date of this annual report.

Number

Description
  1.1*
  1.1 Articles of Incorporation of Woori ~~Bank~~Financial Group (translation in English).
  2.1**
Form of Stock Certificate of Woori ~~Bank’s~~Financial Group’s common stock, par value ￦5,000 per share (translation in English).
  2.2***
Form of the Second Amended and Restated Deposit Agreement by and among Woori ~~Bank,~~Financial Group, Citibank, N.A., as depositary, and all holders and beneficial owners from time to time of American depositary shares ~~evidenced by American depositary receipts,~~issued thereunder, including the form of American depositary receipt.
  4.1*  2.3****
Description of Woori Financial Group’s Capital Stock.
  2.4 Description of Woori Financial Group’s American Depositary Shares.
  4.1 Agreement between the Korea Deposit Insurance Corporation and Woori ~~Bank in Connection with the Sale of Woori Bank Shares~~Financial Group (translation in English).
  8.1*****
List of subsidiaries of Woori Bank.
11.1**
*** Code of Ethics (translation in English).
12.1
Section 302 certifications.
13.1
Section 906 certifications.
15.1
Letter of Deloitte Anjin LLC dated April 29, 2020
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document

*
Incorporated by reference to exhibit ~~1.1~~2.1 to the Annual Report on Form20-F ~~(File No. 001-31811), filed on April 27, 2017.~~
** ~~Incorporated by reference to the corresponding exhibit to the Annual Report on Form 20-F~~ (File No. 001-31811), filed on April 30, ~~2015.~~2019.
**
Incorporated by reference to exhibit (a)(1) to the Registration Statement on FormF-6 (File No. 333-229197), filed on January 11, 2019.
*** ~~Incorporated by reference to exhibit (a) to the Registration Statement on Form F-6 (File No. 333-199370), filed on October 15, 2014.~~
See Item 10.B.Memorandum and Articles of Association.
**** ~~Incorporated by reference to exhibit 4.1 to the Annual Report on Form 20-F (File No. 001-31811), filed on April 27, 2017.~~
~~*****~~ ~~Incorporated by reference to~~
See Note 1 of the notes to the consolidated financial statements of the registrant included in this Annual Report.
*****
Incorporated by reference to exhibit 11.1 to the Annual Report on Form20-F (File No. 001-31811), filed on April 30, 2019.
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Woori ~~Bank~~Financial Group Inc.
(Registrant)
/s/    Tae-Seung ~~Sohn~~ Son
(Signature)
Tae-Seung ~~Sohn~~ Son
~~President and~~ Chief Executive Officer
(Name/Title)
Date: April ~~30, 2018~~29, 2020
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of
Woori ~~Bank~~Financial Group Inc.:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Woori ~~Bank~~Financial Group Inc. and subsidiaries (the “Group”) as of December 31, ~~2017,~~2019, based on criteria established inInternal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2017,~~2019, based on criteria established inInternal Control—Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, ~~2017~~2019 of the Group and our report dated April ~~30, 2018,~~29, 2020, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The ~~Company’s~~Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/    DELOITTE ANJIN LLC
Seoul, Korea
April ~~30, 2018~~29, 2020
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of
Woori ~~Bank~~Financial Group Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of ~~the~~ financial position of Woori ~~Bank~~Financial Group Inc. and subsidiaries (the “Group”) as of December 31, ~~2016~~2018 and ~~2017,~~2019, the related consolidated statements of comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, ~~2017~~2019 (all expressed in Korean Won), and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as of December 31, ~~2016~~2018 and ~~2017,~~2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2017,~~2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Group’s internal control over financial reporting as of December 31, ~~2017,~~2019, based on criteria established inInternal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April ~~30, 2018,~~29, 2020, expressed an unqualified opinion on the Group’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Our audits also comprehended the translation of Korean Won amounts into U.S. dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2 to the consolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers outside Korea.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for credit losses of loans—Refer to Notes 2, 3, 4 and 10 to the financial statements
Critical Audit Matter Description
The Group estimates and records an allowance for credit loss of loans based on expected credit losses. In order to estimate expected credit losses, the Group segregated its portfolio into retail, corporate and credit card loans. Loans measured at amortized cost are KRW 272,607,264 million, with loan loss allowances of KRW 1,575,020 million, as of December 31, 2019. Both the individual and collective impairment methodologies must consider historical losses adjusted for forward looking information and include multiple scenarios for macroeconomic factors. The allowance for certain loans is measured, at least in part, based on the valuation of collateral which must take into account an expectation of when and for how much the collateral will be sold.
There was a significant amount of judgment required by management when determining the appropriateness of the forward looking and macroeconomic information used in the calculation of the expected losses in its loan portfolio.
Given the level of subjectivity and judgment, auditing the estimated allowance for loan losses involved especially complex and subjective judgment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the assumptions and unobservable inputs used by management for the estimate of impaired loans including the following:
We tested the design and operating effectiveness of controls over the appropriateness of the cash-flows estimated to be collected in individually significant loans, including the estimates of collateral values.
We tested the design and operating effectiveness of the controls over the appropriateness of the models used to determine the calculation of the allowance for loan losses for collectively assessed loans and most importantly the determination of the relevant model and assumptions to incorporate forward looking and macroeconomic information.
We used our credit specialists to assist us in challenging the reasonableness of the methodologies and inputs used in the calculation of the allowance for loan losses for collectively assessed loans, most importantly in determining the appropriateness of forward-looking and macroeconomic scenarios used by management.
We tested the Group’s process to develop estimates of future operating cash flows from borrowers with significant loans outstanding to determine the available cash flows to repay the loans. In addition, we challenged these estimates by searching for contradictory evidence available at the balance sheet date.
We selected samples of loans subject to individual assessments and performed the following:
Verified the appropriateness of the process of calculating future cash flows from borrowers with significant loans outstanding to determine the available cash flows to repay the loans.
With assistance of our appraisal specialists and using property auction price information obtained independently from the Group, we evaluated the reasonableness of cash flow estimates based on the future sale of collateral.
/s/    DELOITTE ANJIN LLC
Seoul, Korea
April ~~30, 2018~~29, 2020
We have served as the ~~Company’s~~Group’s auditor since 2002.
WOORI ~~BANK~~FINANCIAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, ~~2016~~2018 AND ~~2017~~2019

   Korean Won U.S. Dollars
   December 31,
2016 December 31,
2017 December 31,
2017
   (in millions) (in thousands)
(Note 2)
ASSETS
Cash and cash equivalents (Note 6)
   7,591,324 6,908,286 6,471,947
Financial assets at fair value through profit or loss
(Notes 4,7,11,12,18 and 26)
   5,650,724 5,843,077 5,474,019
Available-for-sale financial assets (Notes 4,8,11,12 and 18)
   20,817,583 15,352,950 14,383,232
Held-to-maturity financial assets (Notes 4,9,11,12 and 18)
   13,910,251 16,749,296 15,691,383
Loans and receivables (Notes 4,10,11,12,18 and 45)
   258,392,633 267,106,204 250,235,337
Investments in joint ventures and associates (Note 13)
   439,012 417,051 390,709
Investment properties (Note 14)
   358,497 371,301 347,849
Premises and equipment (Notes 15 and 18)
   2,458,025 2,477,545 2,321,059
Intangible assets and goodwill (Note 16)
   483,739 518,599 485,844
Assets held for sale (Note 17)
   2,342 48,624 45,553
Current tax assets (Note 42)
   6,229 4,722 4,424
Deferred tax assets (Note 42)
   232,007 280,130 262,436
Derivative assets (Notes 4,11,12 and 26)
   140,577 59,272 55,529
Net defined benefit assets (Note 24)
   70,938 — —
Other assets (Notes 19 and 45)
   128,846 158,404 148,399


Total assets
   310,682,727 316,295,461 296,317,720


LIABILITIES
Financial liabilities at fair value through profit or loss
(Notes 4,11,12,20 and 26)
   3,803,358 3,427,909 3,211,397
Deposits due to customers (Notes 4,11,21 and 45)
   221,020,411 234,695,084 219,871,357
Borrowings (Notes 4,6,11,12 and 22)
   18,769,515 14,784,706 13,850,880
Debentures (Notes 4,6,11 and 22)
   23,565,449 27,869,651 26,109,358
Provisions (Notes 23, 44 and 45)
   428,477 410,470 384,544
Net defined benefit liability (Note 24)
   64,666 43,264 40,531
Current tax liabilities (Note 42)
   171,192 232,600 217,909
Deferred tax liabilities (Note 42)
   22,023 22,681 21,249
Derivative liabilities (Notes 4,11,12 and 26)
   7,221 67,754 63,475
Other financial liabilities (Notes 4,11,12, 25 and 45)
   21,985,086 13,892,461 13,014,991
Other liabilities (Notes 25 and 45)
   299,376 283,981 266,041


Total liabilities
   290,136,774 295,730,561 277,051,732


EQUITY
Owners’ equity:
   20,386,160 20,365,892 19,079,549
Capital stock (Note 28)
   3,381,392 3,381,392 3,167,818
Hybrid securities (Note 29)
   3,574,896 3,017,888 2,827,273
Capital surplus (Note 28)
   286,331 285,880 267,824
Other equity (Note 30)
   (1,468,025 ) (1,939,274 ) (1,816,787 )
Retained earnings (Notes 31 and 32)
   14,611,566 15,620,006 14,633,421
Non-controlling interests
   159,793 199,008 186,439


Total equity
   20,545,953 20,564,900 19,265,988


Total liabilities and equity
   310,682,727 316,295,461 296,317,720


   Korean Won    U.S. Dollars
   December 31,
2018 (Note 42)    December 31,
2019    December 31,
2019
   (in millions)    (in thousands)
ASSETS
Cash and cash equivalents (Note 6)
   6,747,894    6,392,566    5,532,294
Financial assets at fair value through profit or loss (“FVTPL”) (Notes 4, 7, 11, 12, 18 and 26)
   6,126,316    8,069,144    6,983,249
Financial assets at fair value through other comprehensive income (“FVTOCI”) (Notes 4, 8, 11, 12, and 18)
   18,063,423    27,730,531    23,998,729
Securities at amortized cost (Notes 4, 9, 11, 12 and 18)
   22,932,559    20,320,539    17,585,927
Loans and other financial assets at amortized cost (Notes 4, 10, 11, 12, 18 and 41)
   282,457,578    293,717,693    254,190,994
Investments in joint ventures and associates (Note 13)
   361,766    806,360    697,845
Investment properties (Note 14)
   378,196    280,239    242,526
Premises and equipment (Notes 15 and 18)
   2,450,492    3,364,716    2,911,913
Intangible assets and goodwill (Note 16)
   597,520    844,110    730,515
Assets held for distribution (sale) (Note 17)
   17,912    10,556    9,135
Net defined benefit asset (Note 24)
   —    2,582    2,235
Current tax assets (Note 38)
   20,730    47,367    40,993
Deferred tax assets (Note 38)
   59,641    39,544    34,222
Derivative assets (Designated for hedging) (Notes 4,11,12 and 26)
   35,503    121,131    104,830
Other assets (Notes 19 and 41)
   197,653    233,646    202,204






Total assets
   340,447,183    361,980,724    313,267,611






LIABILITIES
Financial liabilities at FVTPL (Notes 4, 11, 12, 20 and 26)
   2,282,686    2,958,302    2,560,192
Deposits due to customers (Notes 4,11,21 and 41)
   248,690,939    264,685,578    229,065,840
Borrowings (Notes 4, 11, 12 and 22)
   16,202,986    18,998,920    16,442,164
Debentures (Notes 4, 11 and 22)
   28,735,862    30,858,055    26,705,370
Provisions (Notes 23, 40 and 41)
   391,313    443,980    384,232
Net defined benefit liability (Note 24)
   173,109    92,470    80,026
Current tax liabilities (Note 38)
   159,078    182,690    158,105
Deferred tax liabilities (Note 38)
   18,156    134,322    116,246
Derivative liabilities (Designated for hedging) (Notes 4,11,12 and 26)
   51,408    6,837    5,917
Other financial liabilities (Notes 4,11,12, 25 and 41)
   21,442,524    17,706,767    15,323,900
Other liabilities (Notes 25 and 41)
   346,078    420,471    363,886






Total liabilities
   318,494,139    336,488,392    291,205,878






(Continued)
WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION—(CONTINUED)
AS OF DECEMBER 31, 2018 AND 2019
   Korean Won U.S. Dollars
   December 31,
2018 (Note 42) December 31,
2019 December 31,
2019
   (in millions) (in thousands)
EQUITY
Owners’ equity (Note 28)
   21,739,931 21,510,370 18,615,639
Capital stock
   3,381,392 3,611,338 3,125,347
Hybrid securities
   3,161,963 997,544 863,301
Capital surplus
   285,889 626,295 542,012
Other equity
   (2,213,970 ) (2,249,322 ) (1,946,622 )
Retained earnings
   17,124,657 18,524,515 16,031,601
Non-controlling interests
   213,113 3,981,962 3,446,094


Total equity
   21,953,044 25,492,332 22,061,733


Total liabilities and equity
   340,447,183 361,980,724 313,267,611


See accompanying notes ~~to consolidated financial statements.~~
WOORI ~~BANK~~FINANCIAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, ~~2015, 2016~~2017, 2018 AND ~~2017~~2019

Korean Won U.S. Dollars
2015 2016 2017 2017
(in millions, except for per share data) (in thousands,
except per share
data) (Note 2)
Interest income
8,698,235 8,512,312 8,550,687 8,010,611
Interest expense
(3,936,335 ) (3,492,768 ) (3,330,037 ) (3,119,707 )

Net interest income(Notes 34 and 45)
4,761,900 5,019,544 5,220,650 4,890,904
Fees and commissions income
1,757,340 1,865,470 2,069,198 1,938,504
Fees and commissions expense
(780,544 ) (928,339 ) (998,732 ) (935,651 )

Net fees and commissions income(Notes 35 and 45)
976,796 937,131 1,070,466 1,002,853
Dividend income (Note 36)
102,923 184,510 124,992 117,097
Net gain (loss) on financial instruments at fair value through profit or loss (Note 37)
240,342 114,387 (104,827 ) (98,206 )
Net gain (loss) onavailable-for-sale financial assets (Note 38)
(3,281 ) (1,035 ) 192,708 180,536
Impairment losses due to credit loss (Notes 39 and 45)
(966,646 ) (834,076 ) (785,133 ) (735,543 )
General and administrative expenses (Notes 40 and 45)
(3,150,387 ) (3,478,476 ) (3,530,801 ) (3,307,789 )
Net other operating expenses (Notes 40 and 45)
(610,061 ) (367,779 ) (31,313 ) (29,334 )

Operating income
1,351,586 1,574,206 2,156,742 2,020,518
Share of losses of joint ventures and associates (Note 13)
(70,124 ) (19,507 ) (101,514 ) (95,102 )
Other netnon-operating income (expense) (Note 41)
170,484 (1,310 ) (105,722 ) (99,044 )

Non-operating income (loss)
100,360 (20,817 ) (207,236 ) (194,146 )
Net income before income tax expense
1,451,946 1,553,389 1,949,506 1,826,372
Income tax expense (Note 42)
(376,554 ) (275,856 ) (419,418 ) (392,927 )

Net income
1,075,392 1,277,533 1,530,088 1,433,445

Remeasurement of the net defined benefit liability
(78,267 ) 34,162 10,497 9,834

Items that will not be reclassified to profit or loss
(78,267 ) 34,162 10,497 9,834
Gain (loss) onavailable-for-sale financial assets
72,297 12,586 (84,498 ) (79,161 )
Share of other comprehensive income (loss) of joint ventures and associates
3,295 (7,937 ) 612 574
Gain on foreign currency translation of foreign operations
33,837 28,712 (208,329 ) (195,171 )
Gain (loss) on valuation of cash flow hedge
— 10,371 777 728
Equity related to assets held for sale
— — 4,145 3,883

Items that may be reclassified to profit or loss
109,429 43,732 (287,293 ) (269,147 )
Other comprehensive income (loss), net of tax
31,162 77,894 (276,796 ) (259,313 )
Total comprehensive income
1,106,554 1,355,427 1,253,292 1,174,132

Net income attributable to:

Net income attributable to owners
1,059,157 1,261,266 1,512,148 1,416,638
Net Income (loss) attributable tonon-controlling interests
16,235 16,267 17,940 16,807
Total comprehensive income attributable to:

Comprehensive income attributable to owners
1,094,870 1,332,614 1,249,057 1,170,164
Comprehensive income (loss) attributable tonon-controlling interests
11,684 22,813 4,235 3,969
Basic and diluted earnings fromcontinuing and discontinued operations per share(Note 43)(Unit: Korean Won and U.S. Dollar)
1,301 1,567 1,999 1.873
Basic and diluted earnings fromcontinuing operations per share(Note 43) (Unit: Korean Won and U.S. Dollar)
1,301 1,567 1,999 1.873
   Korean Won U.S. Dollars
   2017^(*) 2018
(Note 42)^(*) 2019^(*) 2019^(*)
   (in millions, except for per share data) (in thousands,
except per share
data) (Note 2)
Interest income
   8,550,687 9,684,499 10,576,770 9,153,414
Financial assets at FVTPL (IFRS 9)
   — 54,243 50,619 43,807
Financial assets at FVTOCI
   — 280,371 474,751 410,862
Financial assets at amortized cost
   — 9,349,885 10,051,400 8,698,745
Financial assets at FVTPL (IAS 39)
   53,348 — — —
Available for sale (“AFS”) financial assets
   239,030 — — —
Held to maturity (“HTM”) financial assets
   307,965 — — —
Loans and receivables
   7,950,344 — — —
Interest expense
   (3,330,037 ) (4,033,548 ) (4,683,064 ) (4,052,846 )


Net interest income (Notes 11, 30 and 41)
   5,220,650 5,650,951 5,893,706 5,100,568
Fees and commissions income
   2,069,198 1,680,764 1,709,326 1,479,296
Fees and commissions expense
   (998,732 ) (610,790 ) (606,698 ) (525,053 )


Net fees and commissions income (Notes 11, 31 and 41)
   1,070,466 1,069,974 1,102,628 954,243
Dividend income (Note 32)
   124,992 90,552 107,959 93,431
Net gain on financial instruments at FVTPL (IFRS 9) (Notes 11 and 33)
   — 214,443 25,455 22,030
Net loss on financial instruments at FVTPL (IAS 39) (Notes 11 and 33)
   (104,827 ) — — —
Net gain on financial assets at FVTOCI (Notes 11 and 34)
   — 2,047 11,015 9,534
Net gain on AFS financial assets (Notes 11 and 34)
   192,708 — — —
Net gain arising on financial assets at amortized cost
   — 79,532 102,115 88,373
Net gain on disposals of securities at amortized cost
   — 431 — —
Net gain on disposals of loans and other financial assets at amortized cost
   — 79,101 102,115 88,373
Impairment losses due to credit loss (Notes 11, 35 and 41)
   (785,133 ) (329,574 ) (374,244 ) (323,881 )
General and administrative expenses (Notes 36 and 41)
   (3,530,801 ) (3,624,033 ) (3,766,077 ) (3,259,262 )
Other net operating expenses (Notes 36 and 41)
   (31,313 ) (394,591 ) (302,581 ) (261,863 )


Operating income
   2,156,742 2,759,301 2,799,976 2,423,173
Share of gain (loss) of joint ventures and associates
   (101,514 ) 3,019 83,997 72,693
Net othernon-operating income (expense)
   (105,722 ) 42,552 (160,924 ) (139,268 )


Non-operating income (expense)(Notes 13 and 37)
   (207,236 ) 45,571 (76,927 ) (66,575 )
Net income before income tax expense
   1,949,506 2,804,872 2,723,049 2,356,598
Income tax expense (Note 38)
   (419,418 ) (753,223 ) (685,453 ) (593,209 )
(Continued)
WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME—(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2017, 2018 AND 2019
   Korean Won U.S. Dollars
   2017^(*) 2018
(Note 42)^(*) 2019^(*) 2019^(*)
   (in millions, except for per share data) (in thousands,
except per share
data) (Note 2)
Net income
   1,530,088 2,051,649 2,037,596 1,763,389


Net loss on valuation of equity securities at FVTOCI
   — (30,855 ) (58,129 ) (50,306 )
Net gain on valuation of financial liabilities designated at FVTPL due to own credit risk
   — 100 — —
Items out of share of other comprehensive gain of joint ventures and associates that will not be reclassified to profit or loss
   (2,993 ) — — —
Remeasurement gain (loss) related to defined benefit plan
   10,497 (84,629 ) (34,648 ) (29,985 )


Items that will not be reclassified to profit or loss
   7,504 (115,384 ) (92,777 ) (80,291 )
Net gain on valuation of debt securities at FVTOCI
   — 33,360 43,988 38,068
Net loss on valuation of AFS financial assets
   (84,498 ) — — —
Share of other comprehensive gain of joint ventures and associates
   3,605 2,958 613 531
Net gain (loss) on foreign currency translation of foreign operations
   (208,329 ) (4,379 ) 101,781 88,084
Net gain (loss) on valuation of cash flow hedge
   777 (4,646 ) (1,823 ) (1,578 )
Other comprehensive income on valuation of assets held for sale
   4,145 (4,145 ) — —


Items that may be reclassified to profit or loss
   (284,300 ) 23,148 144,559 125,105
Other comprehensive income (loss), net of tax
   (276,796 ) (92,236 ) 51,782 44,814
Total comprehensive income
   1,253,292 1,959,413 2,089,378 1,808,203


Net income attributable to:

Net income attributable to owners
   1,512,148 2,033,182 1,872,207 1,620,257
Net income attributable tonon-controlling interests
   17,940 18,467 165,389 143,132
Total comprehensive income attributable to:

Comprehensive income attributable to owners
   1,249,057 1,943,885 1,914,393 1,656,766
Comprehensive income attributable tonon-controlling interests
   4,235 15,528 174,985 151,437
Earnings per share (Note 39)

Basic and diluted earnings per share (Unit: In Korean Won and U.S. Dollar)
   1,999 2,796 2,727 2.360
(*)
The consolidated statements of comprehensive income for the years ended December 31, 2018 and 2019 were prepared in accordance with IFRS 9; however, the comparative consolidated statement of comprehensive income for the year ended December 31, 2017 was not retrospectively restated in accordance with IFRS 9.
See accompanying notes ~~to consolidated financial statements.~~
WOORI ~~BANK~~FINANCIAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, ~~2015, 2016~~2017, 2018 AND ~~2017~~2019

Capital
stock Hybrid
securities Capital
surplus Other
equity Retained
earnings Owners’
equity Non-
controlling
interests Total
equity
(Korean Won in millions)
January 1, 2015
3,381,392 2,538,823 291,066 (2,393,138 ) 14,165,358 17,983,501 109,924 18,093,425
Net income
— — — — 1,059,157 1,059,157 16,235 1,075,392
Dividends
— — — — (504,952 ) (504,952 ) (824 ) (505,776 )
Change in ownership interest of investments in consolidated subsidiaries and others
— — 3,193 — — 3,193 660 3,853
Gain (loss) on valuation ofavailable-for-sale financial assets
— — — 73,691 — 73,691 (1,394 ) 72,297
Share of other comprehensive income of joint ventures and associates
— — — 3,295 — 3,295 — 3,295
Gain (loss) on foreign currencies translation of foreign operations
— — — 36,932 — 36,932 (3,095 ) 33,837
Remeasurement of the net defined benefit liability
— — — (78,204 ) — (78,204 ) (63 ) (78,267 )
Dividends to hybrid securities
— — — — (183,320 ) (183,320 ) — (183,320 )
Issuance of hybrid securities
— 795,179 — — — 795,179 — 795,179
Retirement of treasury stock
— — — 3,481 (3,481 ) — — —
Appropriation of merger losses
— — — 806,640 (806,640 ) — — —

December 31, 2015
3,381,392 3,334,002 294,259 (1,547,303 ) 13,726,122 19,188,472 121,443 19,309,915

Capital
stock Hybrid
securities Capital
surplus Other
equity Retained
earnings Owners’
equity Non-
controlling
interests Total
equity
January 1, 2016
3,381,392 3,334,002 294,259 (1,547,303 ) 13,726,122 19,188,472 121,443 19,309,915
Net income
— — — — 1,261,266 1,261,266 16,267 1,277,533
Dividends
— — — — (168,317 ) (168,317 ) (1,286 ) (169,603 )
Change in capital surplus of consolidated subsidiaries
— — (7,928 ) 7,930 — 2 — 2
Changes innon-controlling interests due to acquisition of subsidiary
— — — — — — 16,823 16,823
Gain on valuation ofavailable-for-sale financial assets
— — — 12,296 — 12,296 290 12,586
Share of other comprehensive loss of joint ventures and associates
— — — (7,937 ) — (7,937 ) — (7,937 )
Gain on foreign currencies translation of foreign operations
— — — 22,436 — 22,436 6,276 28,712
Remeasurement of the net defined benefit liability
— — — 34,182 — 34,182 (20 ) 34,162
Gain on valuation of cash flow hedge
— — — 10,371 — 10,371 — 10,371
Dividends to hybrid securities
— — — — (206,515 ) (206,515 ) — (206,515 )
Issuance of hybrid securities
— 549,904 — — — 549,904 — 549,904
Repayment of hybrid securities
— (309,010 ) — — (990 ) (310,000 ) — (310,000 )

December 31, 2016
3,381,392 3,574,896 286,331 (1,468,025 ) 14,611,566 20,386,160 159,793 20,545,953

Capital
stock Hybrid
securities Capital
surplus Other
equity Retained
earnings Owners’
equity Non-controlling
interests Total
equity
(Korean Won in millions)
January 1, 2017
3,381,392 3,574,896 286,331 (1,468,025 ) 14,611,566 20,386,160 159,793 20,545,953
Net income
— — — — 1,512,148 1,512,148 17,940 1,530,088
Dividends to common stocks
— — — — (336,636 ) (336,636 ) (1,554 ) (338,190 )
Capital increase of subsidiaries
— — (451 ) — — (451 ) 36,534 36,083
Net gain (loss) on valuation of AFS financial assets
— — — (85,051 ) — (85,051 ) 553 (84,498 )
Changes in equity of joint ventures and associates
— — — 612 — 612 — 612
Loss on foreign currency translation of foreign operations
— — — (194,347 ) — (194,347 ) (13,982 ) (208,329 )
Gain on valuation of cash flow hedge
— — — 777 — 777 — 777
Remeasurement gain (loss) related to defined benefit plan
— — — 10,773 — 10,773 (276 ) 10,497
Capital related to assets held for distribution (sale)
— — — 4,145 — 4,145 — 4,145
Dividends to hybrid securities
— — — — (167,072 ) (167,072 ) — (167,072 )
Issuance of hybrid securities
— 559,565 — — — 559,565 — 559,565
Redemption of hybrid securities
— (1,116,573 ) — (208,158 ) — (1,324,731 ) — (1,324,731 )

December 31, 2017^(*)
3,381,392 3,017,888 285,880 (1,939,274 ) 15,620,006 20,365,892 199,008 20,564,900

Capital
Stock Hybrid
securities Capital
surplus Other
equity Retained
earnings Owners’
equity Non-controlling
interests Total
equity
(Korean Won in millions)
January 1, 2018
3,381,392 3,017,888 285,880 (1,939,274 ) 15,620,006 20,365,892 199,008 20,564,900
Cumulative effect of change in accounting policy
— — — (392,176 ) 177,091 (215,085 ) 723 (214,362 )

Adjusted balance, beginning of period
3,381,392 3,017,888 285,880 (2,331,450 ) 15,797,097 20,150,807 199,731 20,350,538
Net income
— — — — 2,033,182 2,033,182 18,467 2,051,649
Dividends to common stocks
— — — — (336,636 ) (336,636 ) (2,128 ) (338,764 )
Change in capital of subsidiaries
— — 9 — — 9 (18 ) (9 )
Net gain on valuation of financial liabilities designated as at FVTPL due to own credit risk
— — — 100 — 100 — 100
Changes in other comprehensive income due to redemption of financial liabilities designated as at FVTPL
— — — (4 ) 4 — — —
Net gain (loss) on valuation of financial assets at FVTOCI
— — — 2,733 — 2,733 (228 ) 2,505
Changes in other comprehensive income due to disposal of equity securities at FVTOCI
— — — (1,009 ) 1,009 — — —
Changes in capital due to equity method
— — — 2,958 (10,647 ) (7,689 ) — (7,689 )
Loss on foreign currency translation of foreign operations
— — — (1,929 ) — (1,929 ) (2,450 ) (4,379 )
Loss on valuation of cash flow hedge
— — — (4,646 ) — (4,646 ) — (4,646 )
Remeasurement loss related to defined benefit plan
— — — (84,368 ) — (84,368 ) (261 ) (84,629 )
Capital related to assets held for distribution (sale)
— — — (4,145 ) — (4,145 ) — (4,145 )
Dividends to hybrid securities
— — — — (151,194 ) (151,194 ) — (151,194 )
Issuance of hybrid securities
— 398,707 — — — 398,707 — 398,707
Redemption of hybrid securities
— (254,632 ) — (368 ) — (255,000 ) — (255,000 )
Appropriation of retained earnings
— — — 208,158 (208,158 ) — — —

December 31, 2018^(*)
3,381,392 3,161,963 285,889 (2,213,970 ) 17,124,657 21,739,931 213,113 21,953,044

(Continued)
WOORI ~~BANK~~FINANCIAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, ~~2015, 2016~~2017, 2018 AND ~~2017~~2019

Capital
stock Hybrid
securities Capital
surplus Other
equity Retained
earnings Owners’
equity Non-
controlling
interests Total
equity
January 1, 2017
3,381,392 3,574,896 286,331 (1,468,025 ) 14,611,566 20,386,160 159,793 20,545,953
Net income
— — — — 1,512,148 1,512,148 17,940 1,530,088
Dividends
— — — — (336,636 ) (336,636 ) (1,554 ) (338,190 )
Subsidiary capital increase
— — (451 ) — — (451 ) 36,534 36,083
Gain(loss) on valuation ofavailable-for-sale financial assets
— — — (85,051 ) — (85,051 ) 553 (84,498 )
Share of other comprehensive gain of joint ventures and associates
— — — 612 — 612 — 612
Loss on foreign currencies translation of foreign operations
— — — (194,347 ) — (194,347 ) (13,982 ) (208,329 )
Gain on valuation of cash flow hedge
— — — 777 — 777 — 777
Remeasurement of the net defined benefit liability
— — — 10,773 — 10,773 (276 ) 10,497
Equity related to assets held for sale
— — — 4,145 — 4,145 — 4,145
Dividends on hybrid securities
— — — — (167,072 ) (167,072 ) — (167,072 )
Issuance of hybrid securities
— 559,565 — — — 559,565 — 559,565
Redemption of hybrid securities
— (1,116,573 ) — (208,158 ) — (1,324,731 ) — (1,324,731 )

December 31, 2017
3,381,392 3,017,888 285,880 (1,939,274 ) 15,620,006 20,365,892 199,008 20,564,900

Capital
stock Hybid
securities Capital
surplus Other
equity Retained
earnings Owners’
equity Non-
controlling
interests Total
equity
(U.S. Dollars in thousands)
January 1, 2017
3,167,818 3,349,100 268,246 (1,375,303 ) 13,688,675 19,098,536 149,700 19,248,236
Net income
— — — — 1,416,638 1,416,638 16,807 1,433,445
Dividends
— — — — (315,373 ) (315,373 ) (1,456 ) (316,829 )
Subsidiary capital increase
— — (422 ) — — (422 ) 34,227 33,805
Gain(loss) on valuation ofavailable-for-sale financial assets
— — — (79,679 ) — (79,679 ) 518 (79,161 )
Share of other comprehensive gain of joint ventures and associates
— — — 574 — 574 — 574
Loss on foreign currencies translation of foreign operations
— — — (182,072 ) — (182,072 ) (13,099 ) (195,171 )
Gain on valuation of cash flow hedge
— — — 728 — 728 — 728
Remeasurement of the net defined benefit liability
— — — 10,092 — 10,092 (258 ) 9,834
Equity related to assets held for sale
— — — 3,883 — 3,883 — 3,883
Dividends on hybrid securities
— — — — (156,519 ) (156,519 ) — (156,519 )
Issuance of hybrid securities
— 524,222 — — — 524,222 — 524,222
Redemption of hybrid securities
— (1,046,049 ) — (195,010 ) — (1,241,059 ) — (1,241,059 )

December 31, 2017
3,167,818 2,827,273 267,824 (1,816,787 ) 14,633,421 19,079,549 �� 186,439 19,265,988

   Capital
Stock    Hybrid
securities Capital
surplus Other
equity Retained
earnings Owners’
equity Non-controlling
interests Total
equity
   (Korean Won in millions)
January 1, 2019
   3,381,392    3,161,963 285,889 (2,213,970 ) 17,124,657 21,739,931 213,113 21,953,044
Exchange ofnon-controlling interests in hybrid securities
   —    (3,161,963 ) — — — (3,161,963 ) 3,161,963 —
Net income
   —    — — — 1,872,207 1,872,207 165,389 2,037,596
Dividends to common shares
   —    — — — (437,626 ) (437,626 ) (2,014 ) (439,640 )
Changes in subsidiaries’ capital
   —    — 438 — — 438 (50 ) 388
Net loss on valuation of financial assets at FVTOCI
   —    — — (14,101 ) — (14,101 ) (40 ) (14,141 )
Changes in other comprehensive income due to disposal of equity securities at FVTOCI
   —    — — 29,368 (29,368 ) — — —
Changes in capital due to equity method
   —    — 1,153 613 — 1,766 — 1,766
Gain on foreign currency translation of foreign operations
   —    — — 91,748 — 91,748 10,033 101,781
Loss on valuation of cash flow hedge
   —    — — (1,823 ) — (1,823 ) — (1,823 )
Remeasurement loss related to defined benefit plan
   —    — — (34,251 ) — (34,251 ) (397 ) (34,648 )
Comprehensive stock exchange(Note 1)
   229,946    351,663 — — 581,609 — 581,609
Acquisition of subsidiaries
   —    — — — — — 69,534 69,534
New stocks issue cost
   —    — (12,848 ) — — (12,848 ) — (12,848 )
Net increase of treasury stocks
   —    — — 4,245 — 4,245 — 4,245
Dividends to hybrid securities
   —    — — — (4,362 ) (4,362 ) (134,421 ) (138,783 )
Issuance of hybrid securities
   —    997,544 — — — 997,544 658,470 1,656,014
Redemption of hybrid securities
   —    — — (277 ) — (277 ) (159,618 ) (159,895 )
Appropriation of retained earnings
   —    — — 368 (368 ) — — —
Other changes in consolidated capital
   —    — — (111,242 ) (625 ) (111,867 ) — (111,867 )




December 31, 2019^(*)
   3,611,338    997,544 626,295 (2,249,322 ) 18,524,515 21,510,370 3,981,962 25,492,332




(Continued)
WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2017, 2018 AND 2019
   Capital
Stock    Hybrid
securities Capital
surplus Other
equity Retained
earnings Owners’
equity Non-controlling
interests Total
equity
   (U.S dollars in thousands) (Note 2)
January 1, 2019
   2,926,345    2,736,446 247,416 (1,916,028 ) 14,820,127 18,814,306 184,434 18,998,740
Exchange ofnon-controlling interests in hybrid securities
   —    (2,736,446 ) — — — (2,736,446 ) 2,736,446 —
Net income
   —    — — — 1,620,257 1,620,257 143,132 1,763,389
Dividends to common shares
   —    — — — (378,733 ) (378,733 ) (1,743 ) (380,476 )
Changes in subsidiaries’ capital
   —    — 379 — — 379 (43 ) 336
Net loss on valuation of financial assets at FVTOCI
   —    — — (12,203 ) — (12,203 ) (35 ) (12,238 )
Changes in other comprehensive income due to disposal of equity securities at FVTOCI
   —    — — 25,416 (25,416 ) — — —
Changes in capital due to equity method
   —    — 998 531 — 1,529 — 1,529
Gain on foreign currency translation of foreign operations
   —    — — 79,401 — 79,401 8,683 88,084
Loss on valuation of cash flow hedge
   —    — — (1,578 ) — (1,578 ) — (1,578 )
Remeasurement loss related to defined benefit plan
   —    — — (29,641 ) — (29,641 ) (344 ) (29,985 )
Comprehensive stock exchange(Note 1)
   199,002    304,338 — — 503,340 — 503,340
Acquisition of subsidiaries
   —    — — — — — 60,177 60,177
New stocks issue cost
   —    — (11,119 ) — — (11,119 ) — (11,119 )
Net increase of treasury stocks
   —    — — 3,674 — 3,674 — 3,674
Dividends to hybrid securities
   —    — — — (3,775 ) (3,775 ) (116,331 ) (120,106 )
Issuance of hybrid securities
   —    863,301 — — — 863,301 569,857 1,433,158
Redemption of hybrid securities
   —    — — (240 ) — (240 ) (138,139 ) (138,379 )
Appropriation of retained earnings
   —    — — 318 (318 ) — — —
Other changes in consolidated capital
   —    — — (96,272 ) (541 ) (96,813 ) — (96,813 )




December 31, 2019^(*)
   3,125,347    863,301 542,012 (1,946,622 ) 16,031,601 18,615,639 3,446,094 22,061,733




(*)
The consolidated statements of changes in equity for the years ended December 31, 2018 and 2019 were prepared in accordance with IFRS 9; however, the comparative consolidated statement of changes in equity for the year ended December 31, 2017 was not retrospectively restated in accordance with IFRS 9.
See accompanying notes ~~to consolidated financial statements.~~
WOORI ~~BANK~~FINANCIAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, ~~2015, 2016~~2017, 2018 AND ~~2017~~2019

Korean Won U.S. Dollars
2015 2016 2017 2017
(in millions) (in thousands)
(Note 2)
Cash flows from operating activities:

Net income
1,075,392 1,277,533 1,530,088 1,433,445
Adjustments:

Income tax expense
376,554 275,856 419,418 392,927
Interest income
(8,698,235 ) (8,512,312 ) (8,550,687 ) (8,010,611 )
Interest expense
3,936,335 3,492,768 3,330,037 3,119,707
Dividend income
(102,923 ) (184,510 ) (124,992 ) (117,097 )
Impairment losses due to credit loss
966,646 834,076 785,133 735,543
Loss on valuation of financial instruments at fair value through profit or loss
— — 15,267 14,302
Loss onavailable-for-sale financial assets
3,281 1,035 — —
Share of losses of investments in joint ventures and associates
111,487 56,264 185,020 173,334
Loss on transaction of derivatives / valuation of derivatives
20,982 98,981 109,569 102,648
Loss on fair value hedged items
56,532 475 — —
Provisions
72,062 34,774 107,028 100,268
Retirement benefits
132,131 152,609 142,902 133,876
Depreciation and amortization
240,764 252,031 235,795 220,901
Loss on disposal of investments in joint ventures and associates
10 15,060 38,713 36,268
Loss on disposal of premises and equipment and other assets
2,707 9,718 9,994 9,363
Impairment loss on premises and equipment and other assets
2,990 1,936 390 365
Gain on valuation of financial instruments at fair value through profit or loss
(55,773 ) (75,690 ) — —
Gain onavailable-for-sale financial assets
— — (192,708 ) (180,536 )
Share of profits of investments in joint ventures and associates
(41,363 ) (36,757 ) (83,506 ) (78,232 )
Gain on transaction of derivatives / valuation of derivatives
(59,003 ) (130 ) (122 ) (114 )
Gain on fair value hedged items
(25,235 ) (99,302 ) (53,532 ) (50,150 )
Reversal of provisions
(854 ) (1,396 ) (2,567 ) (2,405 )
Gain on disposal of investments in joint ventures and associates
(61,653 ) (23,457 ) (39,932 ) (37,410 )
Gain on disposal of premises and equipment and other assets
(6,814 ) (1,885 ) (5,028 ) (4,711 )
Reversal of impairment loss on premises and equipment and other assets
(539 ) (3,581 ) (666 ) (624 )
Changes in operating assets and liabilities:

Financial instruments at fair value through profit or loss
(495,507 ) (99,581 ) (583,068 ) (546,241 )
Loans and receivables
(23,150,910 ) (14,433,390 ) (9,647,563 ) (9,038,208 )
Other assets
1,922 219,323 35,953 33,682
Deposits due to customers
20,620,287 11,878,628 13,634,873 12,773,672
Provision for guarantee and loan commitment
(66,399 ) 34,376 (122,711 ) (114,960 )
Net defined benefit liability
(255,585 ) (261,097 ) (46,789 ) (43,834 )
Other financial liabilities
1,205,411 5,158,055 (7,966,786 ) (7,463,591 )
Other liabilities
(91,116 ) (6,163 ) (27,550 ) (25,811 )
Cash received from (paid for) operating activities:

Interest income received
8,692,851 8,511,349 8,570,715 8,029,375
Interest expense paid
(4,355,880 ) (3,593,358 ) (3,404,608 ) (3,189,567 )
Dividends received
100,368 184,674 127,343 119,300
Income tax paid
(534,829 ) (251,627 ) (404,428 ) (378,884 )

Net cash provided by (used in) operating activities
(383,906 ) 4,905,285 (1,979,005 ) (1,854,010 )

   Korean Won U.S. Dollars
   2017^(*) 2018
(Note 42)^(*) 2019^(*) 2019^(*)
   (in millions) (in thousands)
(Note 2)
Cash flows from operating activities:

Net income
   1,530,088 2,051,649 2,037,596 1,763,389
Adjustments to net income:

Income tax expense
   419,418 753,223 685,453 593,209
Interest income
   (8,550,687 ) (9,684,499 ) (10,576,770 ) (9,153,414 )
Interest expense
   3,330,037 4,033,548 4,683,064 4,052,846
Dividend income
   (124,992 ) (90,552 ) (107,959 ) (93,431 )


   (4,926,224 ) (4,988,280 ) (5,316,212 ) (4,600,790 )


Additions of expenses not involving cash outflows:

Impairment loss due to credit loss
   785,133 329,574 374,244 323,881
Loss on valuation of financial instruments at FVTPL (IAS39)
   15,267 — — —
Loss on financial assets at FVTOCI
   — 1,053 1,375 1,189
Loss on derivatives (designated for hedge)
   109,569 36,483 3,686 3,190
Loss on fair value hedge
   — 17,299 86,214 74,612
Loss on other provisions
   107,028 28,350 129,682 112,230
Loss on valuation of investments in joint ventures and associates
   185,020 22,772 19,778 17,117
Loss on disposal of investments in joint ventures and associates
   38,713 2,931 — —
Retirement benefit
   142,902 142,712 165,125 142,904
Depreciation and amortization
   235,795 272,550 505,718 437,662
Loss on disposal of premises and equipment, intangible assets and other assets
   9,994 1,160 3,433 2,970
Impairment loss on premises and equipment, intangible assets and other assets
   390 87 28,295 24,487


   1,629,811 854,971 1,317,550 1,140,242


Deductions of income not involving cash inflows:

Gain on valuation of financial assets at FVTPL (IFRS 9)
   — (215,711 ) (246,175 ) (213,046 )
Gain on redemption of debentures
   — (1,597 ) — —
Gain on securities at FVTOCI
   — (3,100 ) (12,390 ) (10,723 )
Gain on AFS financial assets
   (192,708 ) — — —
Gain on securities at amortized cost
   — (431 ) — —
Gain on derivatives (designated for hedge)
   (122 ) (35,810 ) (126,651 ) (109,607 )
Gain on fair value hedge
   (53,532 ) (42,797 ) (231 ) (200 )
Gain on other provisions
   (2,567 ) (2,014 ) (3,302 ) (2,858 )
Gain on valuation of investments in joint ventures and associates
   (83,506 ) (25,791 ) (103,775 ) (89,810 )
Gain on disposal of investments in joint ventures and associates
   (39,932 ) (50,511 ) — —
Gain on disposal of premises and equipment, intangible assets and other assets
   (5,028 ) (30,278 ) (1,632 ) (1,412 )
Reversal of impairment loss on premises and equipment, intangible assets and other assets
   (666 ) (761 ) (103 ) (89 )


   (378,061 ) (408,801 ) (494,259 ) (427,745 )


Changes in operating assets and liabilities:

Financial instruments at FVTPL (IFRS 9)
   — 670,872 (506,772 ) (438,574 )
Financial instruments at FVTPL (IAS 39)
   (583,068 ) — — —
Loans and other financial assets at amortized cost
   — (15,718,714 ) (11,265,714 ) (9,749,644 )
Loans and receivables
   (9,647,563 ) — — —
Other assets
   35,953 32,328 86,237 74,632
Deposits due to customers
   13,634,873 13,995,747 15,407,222 13,333,814
Provisions
   (122,711 ) (11,920 ) (63,751 ) (55,172 )
Net defined benefit liability
   (46,789 ) (135,313 ) (293,008 ) (253,577 )
Other financial liabilities
   (7,966,786 ) 7,411,617 (4,719,399 ) (4,084,292 )
Other liabilities
   (27,550 ) 96,900 30,693 26,563


   (4,723,641 ) 6,341,517 (1,324,492 ) (1,146,250 )


(Continued)
WOORI ~~BANK~~FINANCIAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS—(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, ~~2015, 2016~~2017, 2018 AND ~~2017~~2019

Korean Won U.S. Dollars
2015 2016 2017 2017
(in millions) (in thousands)
(Note 2)
Cash flows from investing activities:

Disposal ofavailable-for-sale financial assets
18,426,846 20,395,744 24,912,752 23,339,222
Redemption ofheld-to-maturity financial assets
6,404,711 8,462,346 8,587,092 8,044,717
Disposal of investments in joint ventures and associates
75,599 97,135 70,180 65,747
Disposal of subsidiaries
— — 203 191
Disposal of investment properties
— — 418 392
Disposal of premises and equipment
18,600 63 7,428 6,959
Disposal of intangible assets
1,782 4,325 1,188 1,113
Disposal of assets held for sale
3,711 22,723 24,808 23,241
Decrease of derivatives for hedging
56,956 — — —
Net cash flows through business combination (Note 46)
(38,535 ) (132,301 ) — —
Acquisition ofavailable-for-sale financial assets
(16,305,797 ) (23,844,849 ) (19,674,346 ) (18,431,682 )
Acquisition ofheld-to-maturity financial assets
(7,138,013 ) (8,818,376 ) (11,521,065 ) (10,793,376 )
Acquisition of investments in joint ventures and associates
(1,098 ) (43,281 ) (143,161 ) (134,119 )
Acquisition of investment properties
— (4,428 ) (9,872 ) (9,248 )
Acquisition of premises and equipment
(129,454 ) (131,009 ) (162,245 ) (151,998 )
Acquisition of intangible assets
(97,891 ) (191,161 ) (195,929 ) (183,552 )
Increase of derivatives for hedging
(3,273 ) (42,544 ) (13,742 ) (12,874 )

Net cash provided by (used in) investing activities
1,274,144 (4,225,613 ) 1,883,709 1,764,733

Cash flows from financing activities:

Increase in borrowings
12,674,649 8,259,380 9,057,999 8,485,881
Issuance of debentures
13,502,777 15,848,055 18,438,221 17,273,633
Issuance of hybrid securities
795,179 549,904 559,565 524,222
Capital increase of subsidiaries
— — 35,841 33,578
Increase of paid in capital in subsidiaries
3,787 — — —
Decrease in borrowings
(10,346,919 ) (9,524,626 ) (12,692,883 ) (11,891,179 )
Repayment of debentures
(16,425,353 ) (14,118,720 ) (13,620,520 ) (12,760,226 )
Dividends paid
(504,952 ) (168,317 ) (336,636 ) (315,373 )
Dividends paid on hybrid securities
(179,758 ) (201,328 ) (177,730 ) (166,505 )
Repayment of hybrid securities
— (310,000 ) (1,323,400 ) (1,239,812 )
Dividends paid onnon-controlling interests
(824 ) (1,286 ) (1,554 ) (1,456 )

Net cash provided by (used in) financing activities
(481,414 ) 333,062 (61,097 ) (57,237 )

Net increase (decrease) in cash and cash equivalents
408,824 1,012,734 (156,393 ) (146,514 )
Cash and cash equivalents, beginning of the period
5,962,861 6,644,055 7,591,324 7,111,843
Effects of exchange rate changes on cash and cash equivalents
272,370 (65,465 ) (526,645 ) (493,382 )

Cash and cash equivalents, end of the period (Note 6)
6,644,055 7,591,324 6,908,286 6,471,947

   Korean Won U.S. Dollars
   2017^(*) 2018
(Note 43)^(*) 2019^(*) 2019^(*)
   (in millions) (in thousands)
(Note2)
Cash received from operating activities:

Interest income received
   8,570,715 9,617,201 10,478,357 9,068,245
Interest expense paid
   (3,404,608 ) (3,847,275 ) (4,383,916 ) (3,793,956 )
Dividends received
   127,343 90,651 107,940 93,414
Income tax paid
   (404,428 ) (551,560 ) (552,215 ) (477,901 )


   4,889,022 5,309,017 5,650,166 4,889,802


Net cash provided by (used in) operating activities
   (1,979,005 ) 9,160,073 1,870,349 1,618,648


Cash flows from investing activities:

Cashin-flows from investing activities:

Disposal of financial assets at FVTPL (IFRS 9)
   — 11,919,335 11,357,056 9,828,694
Disposal of financial assets at FVTOCI
   — 9,146,307 14,303,197 12,378,362
Disposal of AFS financial assets
   24,912,752 — — —
Redemption of securities at amortized cost
   — 9,426,757 8,709,947 7,537,817
Redemption of HTM financial assets
   8,587,092 — — —
Disposal of investments in joint ventures and associates
   70,180 51,435 30,098 26,048
Disposal of subsidiaries
   203 — — —
Disposal of investment properties
   418 3,512 193 167
Disposal of premises and equipment
   7,428 5,545 7,735 6,694
Disposal of intangible assets
   1,188 9,199 939 813
Disposal of assets held for distribution (sale)
   24,808 80,347 5,608 4,853


   33,604,069 30,642,437 34,414,773 29,783,448


Cashout-flows from investing activities:

Net cashout-flows of business combination
   — (134,967 ) (296,813 ) (256,870 )
Acquisition of financial assets at FVTPL (IFRS 9)
   — (12,322,160 ) (11,823,630 ) (10,232,479 )
Acquisition of financial assets at FVTOCI
   — (13,275,429 ) (23,775,062 ) (20,575,562 )
Acquisition of AFS financial assets
   (19,674,346 ) — — —
Acquisition of securities at amortized cost
   — (15,622,847 ) (6,092,078 ) (5,272,244 )
Acquisition of HTM financial assets
   (11,521,065 ) — — —
Acquisition of investments in joint ventures and associates
   (143,161 ) (48,272 ) (389,096 ) (336,734 )
Acquisition of investment properties
   (9,872 ) (15,195 ) (70,346 ) (60,879 )
Acquisition of premises and equipment
   (162,245 ) (118,668 ) (429,547 ) (371,741 )
Acquisition of intangible assets
   (195,929 ) (176,067 ) (126,342 ) (109,340 )
Cashout-flow related to derivatives designated for hedging
   (13,742 ) — — —


   (31,720,360 ) (41,713,605 ) (43,002,914 ) (37,215,849 )


Net cash provided by (used in) investing activities
   1,883,709 (11,071,168 ) (8,588,141 ) (7,432,401 )


Cash flows from financing activities:

Cashin-flows from financing activities:

Increase in borrowings
   9,057,999 9,606,126 14,467,287 12,520,370
Issuance of debentures
   18,438,221 21,505,849 25,510,713 22,077,640
Issuance of hybrid securities
   559,565 398,707 1,656,014 1,433,158
Capital increase of subsidiaries
   35,841 — — —
Retirement of treasury stocks
   — — 760,101 657,811


   28,091,626 31,510,682 42,394,115 36,688,979


(Continued)
WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS—(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2017, 2018 AND 2019
   Korean Won U.S. Dollars
   2017^(*) 2018
(Note 43)^(*) 2019^(*) 2019^(*)
   (in millions) (in thousands)
(Note2)
Cashout-flows from financing activities:

Cashout-flows from hedging activities
   — — (5,520 ) (4,777 )
Decrease in borrowings
   (12,692,883 ) (8,349,005 ) (11,385,530 ) (9,853,336 )
Redemption of debentures
   (13,620,520 ) (20,903,518 ) (23,651,950 ) (20,469,018 )
Redemption of lease liabilities
   — — (217,867 ) (188,548 )
New stock issue cost
   — — (17,337 ) (15,004 )
Acquisition of treasury stocks
   — — (184,164 ) (159,380 )
Dividends paid
   (336,636 ) (336,636 ) (437,626 ) (378,733 )
Redemption of hybrid securities
   (1,323,400 ) (255,000 ) (160,000 ) (138,468 )
Dividends paid to hybrid securities
   (177,730 ) (147,625 ) (161,052 ) (139,379 )
Dividends paid tonon-controlling interest
   (1,554 ) (2,128 ) (2,014 ) (1,743 )
Capital reduction with consideration fornon-controlling interest
   — — (50 ) (43 )


   (28,152,723 ) (29,993,912 ) (36,223,110 ) (31,348,429 )


Net cash provided by (used in) financing activities
   (61,097 ) 1,516,770 6,171,005 5,340,550


Net decrease in cash and cash equivalents
   (156,393 ) (394,325 ) (546,787 ) (473,203 )
Cash and cash equivalents, beginning of the period
   7,591,324 6,908,286 6,747,894 5,839,804
Effects of exchange rate changes on cash and cash equivalents
   (526,645 ) 233,933 191,459 165,693


Cash and cash equivalents, end of the period (Note 6)
   6,908,286 6,747,894 6,392,566 5,532,294


(*)
The consolidated statements of cash flows for the years ended December 31, 2018 and 2019 were prepared in accordance with IFRS 9; however, the comparative consolidated statement of cash flows for the year ended December 31, 2017 was not retrospectively restated to apply IFRS 9.
See accompanying notes ~~to consolidated financial statements~~
WOORI ~~BANK~~FINANCIAL GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, ~~2015, 2016~~2017, 2018 AND ~~2017~~2019
1. GENERAL

(1)
Summary of the parent company
Woori Financial Group, Inc. (hereinafter referred to the “Group” or the “Parent company”) is primarily aimed at controlling subsidiaries that operate in the financial industry or those that are closely related to the financial industry through the ownership of shares and was established on January 11, 2019 under the Financial Holding Company Act through the comprehensive transfer with shareholders of Woori Bank (hereinafter referred to the “Bank”), ~~which is a controlling entity in accordance with International Financial Reporting Standards (“IFRS”) 10—~~~~Consolidated Financial Statements~~, was established in 1899 and is engaged in the commercial banking business under the Banking Act, trust business under the Financial Investment Services and Capital Market Act, and foreign currencies exchange business with approval from the Bank of Korea (“BOK”) and the Ministry of Finance and Economy (“MOFE”).
Previously, Woori Finance Holdings Co., Ltd., the former holding company of Woori Financial Group, established on March 27, 2001 held a 100% ownership of the Bank. Effective November 1, 2014, Woori Finance Holdings Co., Ltd. completed its merger with and into Woori Bank, its wholly-owned subsidiary, as contemplated by the merger agreement dated July 28, 2014, by and between Woori Finance Holdings Co., Ltd. and Woori Bank. Accordingly, the shares of the Bank, 597 million shares, prior to the merger, were reduced to nil in accordance with capital reduction procedure, and then, in accordance with the merger ratio, the Bank newly issued 676 million shares. As a result, as of December 31, 2017, the common stock of the Bank amounts, expressed in Korean Won (the “KRW” or “Won”), to 3,381,392 million Won.
During the year ended December 31, 2016, the Korea Deposit Insurance Corporation (“KDIC”), as the majority shareholder of the Bank, sold 187 million shares in the Bank in accordance with the contract of ‘Disposal of Woori Bank’s shares to Oligopolistic Shareholders’. In addition to the sale, during the year ended December 31, 2017, KDIC sold additional 33 million shares. As of December 31, 2016 and 2017, KDIC held 158 million shares and 125 million shares (23.37% and 18.43% ownership interest) respectively, of the Bank’s shares issued.
On June 24, 2002, Woori Finance Holdings Co., Ltd. listed its common shares on the Korea Exchange through public offering. In addition, on September 29, 2003, the holding company registered with the Securities and Exchange Commission in the United States of America and, on the same day, listed its American Depositary Shares on the New York Stock Exchange. As Woori Finance Holdings Co., Ltd. was merged into the Bank, the Bank, which is the existing company, succeeded such rights and obligations as a listed company on the Korea Exchange and the New York Stock Exchange.
~~As a result of such merger, the Bank incorporated Woori Card Co., Ltd., Woori Investment Bank Co., Ltd.,~~ Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Services Co., Ltd. and Woori Private Equity Asset Management Co. Ltd. The headquarters of the Group is located at 51,Sogong-ro,Jung-gu, Seoul, Korea, and the capital is 3,611,338 million Won as of the end of the current term while the Korea Deposit Insurance Corp. (“KDIC”), the company’s largest shareholder, owns 124,604,797 shares (17.25%) of the company’s stocks issued. The company’s stocks were listed on the Korea Exchange on February 13, 2019, and its American Depository Shares (“ADS”) are also being traded as the underlying common stock on the New York Stock Exchange since the same date.
The details of stock transfer from the company and subsidiaries as of incorporation are as follows (Unit: Number of shares)
Stock transfer company
   Total number of
issued shares    Exchange ratio
per share    Number of Parent
company’s stocks
Woori Bank
   676,000,000    1.0000000    676,000,000
Woori FIS Co., Ltd.
   4,900,000    0.2999708    1,469,857
Woori Finance Research Institute Co., Ltd.
   600,000    0.1888165    113,289
Woori Credit Information Co., Ltd.
   1,008,000    1.1037292    1,112,559
Woori Fund Service Co., Ltd.
   2,000,000    0.4709031    941,806
Woori Private Equity Asset Management Co., Ltd.
   6,000,000    0.0877992    526,795
As of August 1, 2019, the parent company acquired a 73% interest in Tongyang Asset Management Co. and changed the name to Woori Asset Management Corp. Also, as of August 1, 2019, the parent company gained 100% control of ABL Asset Management Co., Ltd., added it as a consolidated subsidiary and changed the name to Woori ~~Finance Research Institute~~Global Asset Management Co., Ltd. ~~as its subsidiaries.~~on December 6, 2019.
The ~~head office~~parent company paid 598,391 million Won in cash and 42,103,377 new shares of the parent company to acquire 100% interest of Woori Card Co., Ltd. from its subsidiary Woori Bank ~~is located~~on September 10, 2019. On the same date, the company also acquired 59.83% interest of Woori Investment Bank Co., Ltd. from Woori Bank with 392,795 million Won in 51~~Sogong-ro,~~ ~~Jung Gu, Seoul, Korea. The Bank has 876 branches and offices in Korea, and 23 branches and offices overseas as~~cash.
As of December ~~31, 2017.~~30, 2019, the parent company acquired a 67.2% interest (excluding treasury stocks, 51% interest including treasury stocks) in Woori Asset Trust Co., Ltd (formerly Kukje Asset Trust Co., Ltd) and added it as a consolidated subsidiary at the end of 2019.
(2)
The ~~consolidated financial statements for Woori Bank~~companies and ~~its~~ subsidiaries ~~(the “Group”~~(hereinafter ‘consolidated company’) ~~include the following subsidiaries:~~as of December 31, 2018 and 2019 are as follows:

Percentage of ownership (%) Percentage of ownership (%)
Location

Financial
statements
date of use
Subsidiaries
Main business December 31, 2016 December 31, 2017
Main business
December 31,
2018 December
31, 2019
Woori Financial Group Inc.:

Woori Bank
Bank — 100.0 Korea December 31
Woori Card Co., Ltd.
Finance — 100.0 Korea December 31
Woori Investment Bank Co., Ltd.
Other credit finance business — 59.8 Korea December 31
Woori FIS Co., Ltd.
System software development & maintenance — 100.0 Korea December 31
Woori Finance Research Institute Co., Ltd.
Other service business — 100.0 Korea December 31
Woori Credit Information Co., Ltd.
Credit information — 100.0 Korea December 31
Woori Fund Service Co., Ltd.
Finance — 100.0 Korea December 31
Woori Asset Trust Co., Ltd.^(*1)
Real-estate — 67.2 Korea December 31
Woori Asset Management Corp.
Finance — 73.0 Korea December 31
Woori Private Equity Asset Management Co., Ltd.
Finance — 100.0 Korea December 31
Woori Global Asset Management Co., Ltd.
Finance — 100.0 Korea December 31
Woori Bank:

Woori Card Co., Ltd.
Finance 100.0 — Korea December 31
Woori Investment Bank Co., Ltd.
Other credit finance business 59.8 — Korea December 31
Woori FIS Co., Ltd.

System software
development &
maintenance

100.0 100.0 System software development & maintenance 100.0 — Korea December 31
Woori Finance Research Institute Co., Ltd.
Other service business 100.0 — Korea December 31
Woori Credit Information Co., Ltd.
Credit information 100.0 — Korea December 31
Woori Fund Service Co., Ltd.
Finance 100.0 — Korea December 31
Woori Private Equity Asset Management Co., Ltd.
Finance 100.0 100.0 Finance 100.0 — Korea December 31
Woori Finance Research Institute Co., Ltd.
Other service business 100.0 100.0
Woori Card Co., Ltd.
Finance 100.0 100.0
Woori Investment Bank Co., Ltd.^(*1)

Other credit finance
business
58.2 59.8
Woori Credit Information Co., Ltd.
Credit information 100.0 100.0
Woori America Bank
Finance 100.0 100.0 Finance 100.0 100.0 America December 31
Woori Global Markets Asia Limited
” 100.0 100.0 Finance 100.0 100.0 Hong Kong December 31
Woori Bank China Limited
” 100.0 100.0 Finance 100.0 100.0 China December 31
AO Woori Bank
” 100.0 100.0 Finance 100.0 100.0 Russia December 31
PT Bank Woori Saudara Indonesia 1906 Tbk^(*1)
” 74.0 79.9
PT Bank Woori Saudara Indonesia 1906 Tbk
Finance 79.9 79.9 Indonesia December 31
Banco Woori Bank do Brasil S.A.
” 100.0 100.0 Finance 100.0 100.0 Brazil December 31
Korea BTL Infrastructure Fund
” 99.9 99.9 Finance 99.9 99.9 Korea December 31
Woori Fund Service Co., Ltd.
” 100.0 100.0
Woori Finance Cambodia PLC.
” 100.0 100.0 Finance 100.0 100.0 Cambodia December 31
Woori Finance Myanmar Co., Ltd.
” 100.0 100.0 Finance 100.0 100.0 Myanmar December 31
Wealth Development Bank
” 51.0 51.0 Finance 51.0 51.0 Philippines December 31
Woori Bank Vietnam Limited
” 100.0 100.0 Finance 100.0 100.0 Vietnam December 31
WB Finance Co., Ltd.
Finance 100.0 100.0 Cambodia December 31
Woori Bank Europe
Finance 100.0 100.0 Germany December 31
Kumho Trust First Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Asset securitization 0.0 0.0 Korea December 31
Asiana Saigon Inc.^(*2)
” 0.0 0.0 Asset securitization 0.0 0.0 Korea December 31
An-Dong Raja First Co., Ltd.^(*6)
” 0.0 —
Consus Eighth Co., LLC^(*2)
” 0.0 0.0
KAMCO Value Recreation First Securitization Specialty Co., Ltd.^(*2)
” 15.0 15.0 Asset securitization 15.0 15.0 Korea December 31
Hermes STX Co., Ltd.^(*2)
” 0.0 0.0 Asset securitization 0.0 0.0 Korea December 31
BWL First Co., LLC^(*2)
” 0.0 0.0 Asset securitization 0.0 0.0 Korea December 31
Woori Poongsan Co., Ltd.^(*6)
” 0.0 —
Deogi Dream Fourth Co., Ltd.^(*2)
” 0.0 0.0 Asset securitization 0.0 0.0 Korea December 31
Jeonju Iwon Ltd.^(*2)
” 0.0 0.0 Asset securitization 0.0 0.0 Korea December 31
Wonju I one Inc.^(*2)
” 0.0 0.0 Asset securitization 0.0 0.0 Korea December 31
Heitz Third Co., Ltd.^(*2)
” 0.0 0.0 Asset securitization 0.0 0.0 Korea December 31
Woorihansoop 1st Co., Ltd.^(*2)
” 0.0 0.0 Asset securitization 0.0 0.0 Korea December 31
Electric Cable First Co., Ltd^(*2)
” 0.0 0.0
Electric Cable First Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Woori International First Co., Ltd.^(*2)
” 0.0 0.0 Asset securitization 0.0 0.0 Korea December 31
Woori HJ First Co., Ltd.^(*2)
” 0.0 0.0
Woori WEBST 1st Co., Ltd.^(*2)
” — 0.0 Asset securitization 0.0 0.0 Korea December 31
HNLD 1st Inc.^(*2)
” — 0.0
Wibihansoop 1st Co., Ltd.^(*2)
” — 0.0 Asset securitization 0.0 0.0 Korea December 31
Uri QS 1st Co., Ltd^(*2)
” — 0.0
Uri QS 1st Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Uri Display 1st Co., Ltd.^(*2)
” — 0.0 Asset securitization 0.0 0.0 Korea December 31
Tiger Eyes 2nd Co., Ltd.^(*2)
” — 0.0 Asset securitization 0.0 0.0 Korea December 31
Woori Serveone 1st Co., Ltd.^(*2)
” — 0.0 Asset securitization 0.0 0.0 Korea December 31
HeungkukWoori Tech Company Private Placement Investment Trust No.1 and 5 beneficiary certificates^(*3)

Securities investment
and others
— —
Principle Guaranteed Trust^(*4)
Trust 0.0 0.0
Principle and Interest Guaranteed Trust^(*4)
” 0.0 0.0
Woori Bank and Woori Private Equity Asset Management Co., Ltd.:

Woori Private Equity Fund^(*5)

Other financial
business
31.9 —
Woori Private Equity Fund:

Woori EL Co., Ltd.^(*5)

Other financial
business
100.0 —
Woori Investment Bank:

Dongwoo First Securitization Specialty Co., Ltd.^(*2)
Asset securitization 5.0 5.0
Seari First Securitization Specialty Co., Ltd.^(*2)
Asset securitization — 5.0
Namjong 1st Securitization Specialty Co., Ltd.^(*2)
” — 5.0
Bukgeum First Securitization Specialty Co., Ltd.^(*2)
” — 5.0
Woori Card Co., Ltd.:

TUTUFinance-WCI Myanmar Co., Ltd.
Finance 100.0 100.0
Woori Card one of2017-1 Securitization Specialty Co., Ltd.^(*2)
Asset securitization — 0.5
Woori Card one of2017-2 Securitization Specialty Co., Ltd.^(*2)
” — 0.5
Percentage of ownership (%)
Location

Financial
statements
date of use
Subsidiaries

Main business
December 31,
2018 December
31, 2019
Uri Display 2nd Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Woori the Colony Unjung Securitization Specialty Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Woori Dream 1st Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Woori Dream 2nd Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Woori H 1st Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Woori HS 1st Co., Ltd.
Asset securitization 0.0 — Korea December 31
Woori HS 2nd Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Woori Sinnonhyeon 1st Inc.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Woori K 1st Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Uri S 1st Co., Ltd.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Smart Casting Inc.^(*2)
Asset securitization 0.0 0.0 Korea December 31
Uri Display 3rd Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
TY 1st Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori HJ 2nd Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori-HJ 3rd Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Uri K 2nd Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori KC No.1 Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori Lake 1st., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori QSell 2nd Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Quantum Jump the 1st Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Quantum Jump the 2nd Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori BK the 1st Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori-HC 1st Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Wivi Synergy 1st Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
ATLANTIC TRANSPORTATION 1 S.A.^(*2)
Asset securitization — 0.0 Marshall islands December 31
Woori Gongdeok First Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
HD Project Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori HW 1st Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori HC 2nd Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori Dream 3rd Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori SJS 1st Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
G5 Pro Short-term Bond Investment Fund 13^(*3)
Securities investment and others 100.0 100.0 Korea December 31
Heungkuk Global Private Placement Investment Trust No. 1^(*3)
Securities investment and others 98.5 98.5 Korea December 31
AI Partners UK Water Supply Private Placement Investment Trust No. 2^(*3)
Securities investment and others 97.3 97.3 England December 31
Consus Sakhalin Real Estate Investment Trust 1st^(*3)
Securities investment and others 75.0 75.0 Korea December 31
Multi Asset Global Real Estate Investment TrustNo. 5-2^(*3)
Securities investment and others — 99.0 Korea December 31
Igis Australia Investment TrustNo. 209-1^(*3)
Securities investment and others — 99.4 Korea December 31
Woori Global Development Infrastructure Synergy Company Private Placement Investment Trust No.1^(*3)
Securities investment and others — 99.9 Korea December 31
IGIS Global Private Placement Real Estate FundNo. 316-1^(*3)
Securities investment and others — 99.3 Korea December 31
Principal Guaranteed Trust^(*4)
Trust 0.0 0.0 Korea December 31
Principal and Interest Guaranteed Trust^(*4)
Trust 0.0 0.0 Korea December 31
Multi Asset Global Real Estate Investment TrustNo. 5-2:

MAGI No.5 LuxCo S.a.r.l.^(*2)
Asset securitization — 54.6 Luxembourg December 31
MAGI No.5 LuxCo S.a.r.l.:

ADP 16 Brussels^(*2)
Asset securitization — 0.0 Belgium December 31
Woori Investment Bank Co., Ltd.:

Dongwoo First Securitization Specialty Co., Ltd.^(*2)
Asset securitization 5.0 5.0 Korea December 31
Seari First Securitization Specialty Co., Ltd.^(*2)
Asset securitization 5.0 5.0 Korea December 31
Seari Second Securitization Specialty Co., Ltd.^(*2)
Asset securitization 5.0 5.0 Korea December 31
Percentage of ownership (%)
Location

Financial
statements
date of use
Subsidiaries

Main business
December 31,
2018 December
31, 2019
Namjong 1st Securitization Specialty Co.,
Ltd.^(*2)
Asset securitization 5.0 5.0 Korea December 31
Bukgeum First Securitization Specialty Co., Ltd.^(*2)
Asset securitization 5.0 5.0 Korea December 31
Bukgeum Second Securitization Specialty Co., Ltd.^(*2)
Asset securitization 5.0 5.0 Korea December 31
WS1909 Securitization Specialty Co., Ltd.^(*2)
Asset securitization — 5.0 Korea December 31
One Punch Korea the 1st Co., Ltd.^(*2).
Asset securitization — 0.0 Korea December 31
One Punch blue the 1^st Co., Ltd.^(*2)
Asset securitization — 0.0 Korea December 31
Woori Card Co., Ltd.:

TUTU Finance –WCI Myanmar Co., Ltd.
Finance 100.0 100.0 Myanmar December 31
Woori Card one of2017-1 Securitization Specialty Co., Ltd.^(*2)
Asset securitization 0.5 0.5 Korea December 31
Woori Card one of2017-2 Securitization Specialty Co., Ltd.^(*2)
Asset securitization 0.5 0.5 Korea December 31
Woori Card one of2018-1 Securitization Specialty Co., Ltd.^(*2)
Asset securitization 0.5 0.5 Korea December 31
WOORI CARD2019-1 ASSET SECURITIZATION SPECIALTY CO., LTD.^(*2)
Asset securitization — 0.5 Korea December 31
Woori Private Equity Asset Management Co., Ltd. and Woori Investment Bank Co., Ltd.:

Japanese Hotel Real Estate Private Equity Fund 1^(*3)
Securities investment and others — 45.5 Korea December 31
Woori Asset Management Corp.:

Woori china convertible bond fund^(*3)
Securities investment and others — 98.6 Korea December 31
Woori Global Asset Management Co.,Ltd.:

WOORIG China Value Equity (C/C(F))^(*3)
Securities investment and others — 95.1 Korea December 31
Woori Bank, Woori Investment Bank Co., Ltd and Woori Private Equity Asset Management Co., Ltd.:

Woori Innovative Growth Professional Investment Type Private Investment Trust No.1^(*3)
Securities investment and others — 60.0 Korea December 31
Woori bank and Woori Investment Bank Co., Ltd.:

Heungkuk Woori Tech Company Private Placement Investment Trust No. 1^(*3)
Securities investment and others 98.0 100.0 Korea December 31

(*1) The entity issued a rights offering that entitles its existing shareholders to buy additional shares directly from the entity in proportion to its existing holders. But, some shareholders opted not to buy the new share
As of December 31, 2018, Woori bank held 8.6% interest and ~~Woori Bank was able to purchase more shares than they would be in accordance with their ownership percentage. This purchase resulted in the increase~~hold 67.2% interest as of ~~its ownership percentage.~~December 31, 2019 as acquiring 58.6% interests additionally during current period.
(*2)
The entity is a structured entity for the purpose of asset ~~securitization and is in scope for consolidation.~~securitization. Although the Group is not a majority shareholder, the Group 1) has the power over the investee, 2) is exposed to or has rights to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns.
(*3)
The entity is a structured entity for the purpose of investment in ~~securities and~~securities. Although the Group is ~~in scope for consolidation, considering that~~not a majority shareholder, the Group 1) has the power over the investee, 2) is exposed to or has rights to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns.
(*4)
The entity is a ~~money trust~~‘money trust’ under the Financial Investment Services and Capital Markets ~~Act and is in scope for consolidation.~~Act. Although the Group is not a majority shareholder, the Group 1) has the power over the investee, 2) is exposed to or has rights to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns.
~~(*5)~~ ~~Due to liquidation of Woori Private Equity Asset Management Co., Ltd. during the year ended December 31, 2017 the entity was excluded from the scope for consolidation.~~
~~(*6)~~ ~~Due to liquidation during the year ended of December 31, 2017, the entity was excluded from the scope for consolidation.”~~
To determine whether the Group controls the structured entities, where the Group does not hold any ownership in them, the Group considered various factors in accordance with the Group’s accounting policy, which can be summarized as follows:
~~Involvement with the entity~~
~~The Group’s role within the entity~~
~~Structured Entities~~
~~The Group is involved with structured entities through the purchase of securities issued by the structured entities, such as senior, mezzanine, or subordinated bonds.~~
~~This is a case where the Group arranges the securitizations of its own or third parties’ assets and supports the transaction by purchasing the subordinated bond issued by the structured entity.~~
As for the consolidated structured entities in this category, the Group is significantly exposed to the variable returns from the entities through the subordinated holdings more than other investors and the Group has the power over relevant activities that significantly affect the variable return—such as the Group has the right to determine to wind down the entity, as a major investor, in case of default.
~~• KAMCO Value Recreation First Securitisation Specialty CO., Ltd.~~
The Group is involved with structured entities through the provision of credit facilities to the entities, such as through financial guarantee and purchase agreement of asset-backed commercial papers (‘ABCP’).
This is a case where the Group supports the securitization transactions through provision of liquidity facilities or other credit enhancements, such as financial guarantees. The Group also sponsors a number of asset-backed commercial paper (ABCP) conduits by arranging the acquisition of loans.
~~As for the consolidated structured entities in this category, the Group is significantly exposed to the variable returns from the entities through the financial guarantees or purchase~~
~~• Kumho Trust First Co., Ltd and 14 structured entities~~
~~Involvement with the entity~~
(3)
The ~~Group’s role within the entity~~
~~Structured Entities~~
agreement provided more than other investors and the Group has the power over relevant activities that significantly effects the variable return—such as the Group has the right to determine to dispose the securitized assets of the entity, through the contracts, in case of default.
~~The Group is involved with a structured entity by originating loans directly to the entity.~~
~~This is a case where the Group invests in a structured entity, such as origination of loans.~~
As for the consolidated structured entities in this category, the Group is significantly exposed to the variable returns from the entities through the loan originated and the Group has the power over relevant activities that significantly effects the variable return—such as the Group makes significant investment decisions.
~~• Consus Eighth Co., LLC.~~
~~The Group manages funds on behalf of the customers through the operation of trusts accounts.~~
This is a case where the Group is designated as a trustee by the customers (or investors) of the trusts to manage operations, investments, and financing, and they do not participate in such decision making process.
As for the consolidated structured entities in this category, the Group is exposed to expected loss from the trusts, through its provision of guarantee on the original principal or both of principal and interests.
~~• Principal guaranteed trusts~~
~~• Principal and interest guaranteed trusts~~
~~(3)~~ ~~As of December 31, 2016 and 2017, despite having more than a 50% ownership interests, the~~ Group has not consolidated the following ~~companies~~entities as ~~the Group do not have the ability to control following subsidiaries:~~of December 31, 2018 and 2019 despite having more than 50% ownership interest:

As of December 31, ~~2016~~2018

~~Entities~~Subsidiaries

Location

Main ~~business~~Business
Percentage of
ownership (%)
Golden Bridge NHN Online Private Equity Investment^(*1))
Korea Securities Investment 60.0
Mirae Asset Seobu Underground Expressway Professional Investment^(*)
Korea Securities Investment 65.8
Mirae Asset Maps Clean Water Private Equity Investment
Trust 7th^(*)
Korea Securities investment 59.7
Kiwoom Yonsei Private Equity Investment Trust^(*)
Korea Securities investment 88.9
Hana Walmart Real Estate Investment Trust41-1^(*)
Korea Securities investment 89.6
IGIS Europe Private Placement Real Estate Fund
No. 163-2^(*)
Korea Securities investment 97.9
IGIS Global Private Placement Real Estate Fund
No. 148-1^(*)
Korea Securities investment 75.0
IGIS Global Private Placement Real Estate Fund
No. 148-2^(*)
Korea Securities investment 75.0
KB Nongso Sewage Treatment Equipment Private Special
Asset^(*)
Korea Securities investment 50.0
Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1^(*)
Korea Securities investment 66.2
Hangkang Sewage Treatment Plant Fund^(*)
Korea Securities investment 55.6
Consus KyungJu Green Private Placement Real Estate Fund No. 1^(*)
Korea Securities investment 52.4
(*)
Since the investee is a private equity investment fund, the Group does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.
As of December 31, 2019
Subsidiaries
Location
Main Business
Percentage of
ownership (%)
Golden Bridge NHN Online Private Equity Investment^(*)
Korea Securities Investment 60.0
Mirae Asset Maps Clean Water Private Equity Investment
Trust 7th^(*1))
Korea Securities Investment 59.7
Kiwoom Yonsei Private Equity Investment Trust^(*1))
Korea Securities Investment 88.9
~~Kiwoom Frontier Professional Investment~~IGIS Europe Private Placement Real Estate Fund ~~6 (Bond)~~
No. 163-2^(*2))
Korea Securities Investment ~~50.0~~
~~As of December 31, 2017~~
~~Subsidiaries~~
~~Location~~ ~~Main Business~~ ~~Percentage of~~
~~ownership (%)~~
~~Golden Bridge NHN Online Private Equity Investment~~^(*1)
~~Korea~~ ~~Securities Investment~~ ~~60.0~~
~~Mirae Asset Maps Clean Water Private Equity Investment Trust 7th~~^(*1)
~~Korea~~ ~~Securities Investment~~ ~~59.7~~
~~Kiwoom Yonsei Private Equity Investment Trust~~^(*1)
~~Korea~~ ~~Securities Investment~~ ~~88.9~~
~~Hana Walmart Real Estate Investment Trust41-1~~^(*1)
~~Korea~~ ~~Securities Investment~~ ~~90.1~~97.9
IGIS Global Private Placement Real Estate Fund
No. 148-1^(*1))
Korea Securities Investment 75.0
IGIS Global Private Placement Real Estate Fund
No. 148-2^(*1))
Korea Securities Investment 75.0
Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1^(*)
Korea Securities Investment 66.7
Hangkang Sewage Treatment Plant Fund^(*)
Korea Securities Investment 55.6
KIM Pocheon-Hwado Highway Infra Private Placement Special Asset Fund^(*)
Korea Securities Investment 55.2
(*)
Since the investee is a private equity investment fund, the Group does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.
(4)
The summarized financial information of the major subsidiaries are as follows. The financial information of each subsidiary was prepared on the basis of consolidated financial statements. (Unit: Korean Won in millions):
As of and for the year ended December 31, 2018
Assets Liabilities Operating
revenue Net income (loss)
attributable to
owners Comprehensive
income (loss)
attributable to
owners
Woori FIS Co., Ltd.
96,260 63,412 271,651 2,840 269
Woori Private Equity Asset Management Co., Ltd.
38,820 1,439 1,713 (2,794 ) (2,843 )
Woori Finance Research Institute Co., Ltd.
3,891 560 4,708 7 (109 )
Woori Card Co., Ltd.
9,987,057 8,305,093 1,371,301 114,767 106,517
Woori Investment Bank Co., Ltd.
2,682,660 2,367,418 205,446 25,552 25,533
Woori Credit Information Co., Ltd.
34,921 6,386 36,883 1,657 1,411
Woori America Bank
2,182,454 1,878,117 90,975 20,510 32,335
Woori Global Markets Asia Limited
517,627 396,216 18,748 5,144 9,647
Woori Bank China Limited
5,470,927 4,953,813 366,973 21,879 19,194
AO Woori Bank
305,521 256,260 19,433 5,163 (3,234 )
PT Bank Woori Saudara Indonesia 1906 Tbk
2,355,975 1,853,768 192,719 40,385 27,109
Banco Woori Bank do Brasil S.A.
179,130 149,146 13,971 1,262 (2,326 )
Korea BTL Infrastructure Fund
777,437 299 29,760 26,057 26,057
Woori Fund Service Co., Ltd.
14,448 1,440 10,052 1,597 1,597
Woori Finance Cambodia PLC.
93,239 71,133 11,038 2,826 3,676
Woori Finance Myanmar Co., Ltd.
19,340 6,886 4,496 640 (1,256 )
Wealth Development Bank
218,134 184,344 13,668 80 (451 )
Woori Bank Vietnam Limited
954,580 720,554 48,716 10,710 13,618
WB Finance Co., Ltd.
268,794 225,655 24,310 2,421 2,329
Woori Bank Europe
58,399 311 5 (5,959 ) (5,974 )
Money trust under the FISCM Act
1,582,765 1,552,594 54,860 259 259
Structured entity for the securitization of financial assets
1,369,745 1,786,869 53,578 4,990 (5,681 )
Structured entity for the investments in securities
63,676 142 1,826 (1,299 ) (3,009 )
As of and for the year ended December 31, 2019
Assets Liabilities Operating
revenue Net income (loss)
attributable to
owners Comprehensive
income (loss)
attributable to
owners
Woori Bank^(*1)
348,181,658 325,526,568 22,240,947 1,505,547 1,531,793
Woori Card Co., Ltd.
10,087,342 8,299,175 1,368,234 114,196 111,782
Woori Investment Bank Co., Ltd.
3,398,960 3,031,622 204,655 53,358 52,095
Woori FIS Co., Ltd.
91,079 55,112 244,923 3,107 3,119
Woori Finance Research Institute Co., Ltd.
5,447 1,999 5,452 160 117
Woori Credit Information Co., Ltd.
37,872 7,948 39,118 1,698 1,389
Woori Fund Service Co., Ltd.
16,852 2,109 11,071 1,735 1,735
Woori Asset Trust Co., Ltd.^(*2)
139,839 45,410 — — —
Woori Asset Management Corp.^(*2)
113,037 6,301 9,204 1,720 2,544
Woori Private Equity Asset Management Co., Ltd.
38,243 2,985 4,152 (2,087 ) (2,124 )
Woori Global Asset Management Co., Ltd.^(*2)
32,807 3,230 3,588 (1,360 ) (1,360 )

(*1)
The ~~Group owns the majority ownership interest in these structured entities, but has no power~~amount is prepared based on the ~~investees’ relevant activities. As results, it is deemed that~~consolidated financial statements of Woori Bank (reflecting the ~~Group has no power~~classification of profit or ~~control on~~loss of the ~~structured entities.~~discontinued operation).
(*2) ~~Due~~
The income or loss information of Woori Asset Management Corp. and Woori Global Asset Management Co., Ltd. are prepared based on the income or loss from August 1, 2019, the date on which the power was obtained, to ~~redemption of the fund during 2017, the fund was excluded from the list as of~~ December 31, ~~2017 above.~~
~~(4)~~ ~~The summarized financial~~2019. In addition, the Group acquired Woori Asset Trust Co., Ltd on December 30, 2019, thus the income or loss information ~~before the elimination~~ of ~~intercompany transactions of the subsidiaries whose financial information were prepared under IFRS for the Group’s consolidated financial statements is as follows (Unit: Korean Won in millions):~~
Woori Asset Trust Co., Ltd are not included.

   As of and for the year ended December 31, 2016
   Assets    Liabilities    Operating
revenue    Net income (loss)
attributable to
owners Comprehensive
income (loss)
attributable to
owners
Woori FIS Co., Ltd.
   141,329    105,821    244,783    1,048 1,432
Woori Private Equity Asset Management Co., Ltd.
   97,338    53,244    2,154    312 219
Woori Finance Research Institute Co., Ltd.
   3,710    334    4,445    108 100
Woori Card Co., Ltd.
   7,606,108    6,180,893    1,555,373    109,393 116,381
Woori Investment Bank Co., Ltd.
   1,576,627    1,404,566    178,572    23,872 23,897
Woori Credit Information
   31,292    4,416    27,884    543 618
Woori America Bank
   2,186,049    1,973,263    73,909    15,266 20,899
Woori Global Markets Asia Limited
   272,008    147,581    7,255    1,863 5,582
Woori Bank (China) Limited
   4,984,017    4,466,812    475,174    32,025 11,505
AO Woori Bank
   239,860    188,474    16,221    5,650 15,553
PT Bank Woori Saudara Indonesia 1906 Tbk
   2,089,822    1,693,111    179,014    24,573 48,542
Banco Woori Bank do Brasil S.A.
   241,229    206,043    17,059    2,786 9,600
Korea BTL Infrastructure Fund
   784,770    299    33,476    29,617 29,617
Woori Fund Service Co., Ltd.
   11,386    1,372    7,787    1,011 1,011
Woori Finance Cambodia PLC.
   32,405    24,751    4,545    1,250 1,494
Woori Finance Myanmar Co., Ltd.
   4,305    2,651    380    (613 ) (569 )
Wealth Development Bank
   209,779    174,446    12,519    1,248 1,876
Woori Bank Vietnam Limited
   159,223    278    —    (346 ) 3,545
Money trust under the FISCM Act^(*)
   1,525,145    1,495,815    55,540    697 697
Structured entity for the securitization of financial assets
   487,431    895,824    29,480    6,912 7,138
Structured entity for the investments in securities
   4,397,163    1,898,977    137,896    56,605 61,535

   As of and for the year ended December 31, 2017
   Assets    Liabilities    Operating
revenue    Net income (loss)
attributable to
owners Comprehensive
income (loss)
attributable to
owners
Woori FIS Co., Ltd.
   103,932    71,386    252,460    1,940 (2,963 )
Woori Private Equity Asset Management Co., Ltd.
   42,894    2,670    7,257    (4,114 ) (4,074 )
Woori Finance Research Institute Co., Ltd.
   3,790    350    4,733    83 64
Woori Card Co., Ltd.
   8,605,993    6,973,705    1,771,157    101,214 107,321
Woori Investment Bank Co., Ltd.
   1,880,157    1,588,610    183,376    20,023 20,210
Woori Credit Information Co., Ltd.
   33,298    6,175    31,580    861 752
Woori America Bank
   1,954,301    1,679,248    81,337    11,869 (16,833 )
Woori Global Markets Asia Limited
   290,226    178,343    11,345    1,922 (12,544 )
Woori Bank (China) Limited
   4,960,637    4,458,683    388,913    13,809 (15,252 )
AO Woori Bank
   201,704    149,101    15,656    4,748 1,217
PT Bank Woori Saudara Indonesia 1906 Tbk
   2,230,617    1,745,171    192,485    38,488 (18,689 )
Banco Woori Bank do Brasil S.A.
   213,889    181,544    20,455    1,843 (2,840 )
Korea BTL Infrastructure Fund
   786,480    301    30,240    26,390 26,390
Woori Fund Service Co., Ltd.
   12,653    1,242    9,021    1,398 1,398
Woori Finance Cambodia PLC.
   51,304    32,873    5,895    983 (473 )
Woori Finance Myanmar Co., Ltd.
   18,236    5,307    2,506    791 15
Wealth Development Bank
   191,049    156,808    13,632    1,323 (1,093 )
Woori Bank Vietnam Limited
   775,758    632,160    29,698    2,436 (15,347 )
Money trust under the FISCM Act^(*)
   1,560,672    1,530,760    44,344    582 582
Structured entity for the securitization of financial assets
   867,583    1,275,719    22,730    1,179 (2,800 )
Structured entity for the investments in securities
   34,939    76    377    (475 ) (38,592 )
~~(*)~~ ~~FISCM Act: Financial Investment Services and Capital Markets Act~~

(5) ~~Structured~~
The financial support that the Group provides to consolidated structured entities is as follows:
~~The Group is involved with structured entities, mainly through securitization of financial assets, investment fund, and money trust.~~

Structured entity for ~~the~~asset securitization ~~of financial assets~~
The structured entity which is established for the purpose of securitization of project financing loans, corporate bonds, and other financial assets. The Group is involved with the structured entity through ~~providing with~~provision of credit facility over asset-backed commercial papers issued by the entity, originating loans directly to the structured entity, or purchasing 100% of the subordinated debts issued by the structured entity.

Structured entity for the investments in securities
The structured entity is established for the purpose of investments in securities. The Group acquires beneficiary certificates through its contribution of ~~fund~~funding to the structured entity by the Group, and it is exposed to the risk that it may not be able to recover its fund depending on the result of investment performance of asset managers of the structured entity.
Money trust under the Financial Investment Services and Capital Markets Act
The Group provides with financial guarantee of principal and interest or solely principal ~~only~~ to some of its trust products. Due to the financial guarantees, the Group may be obliged ~~to supplement~~ when the principal and interest or principal of the trust product sold is short of the guaranteed amount depending on the result of investment performance of the trust product.
~~Structured entities are assessed~~As of December 31, 2019, the Group provides 2,241,640 million Won of credit facilities for ~~consolidation in accordance with the accounting policy set out in Note 2. (2), and also refer to Note 1. (2).~~
~~Consolidated structured entities~~
~~Securitizations~~
The Group uses structured entities to securitize loan and receivables, corporate bonds, and other financial assets that it has originated or acquired in order to diversify its source of funding for asset origination and capital efficiency purposes. In turn, the structured entities ~~issue asset backed securities collateralized by the transferred financial assets. In these securitizations, various classes of debt securities are issued~~mentioned above.
(6)
The Group has entered into various agreements with structured entities such as asset securitization, structured finance, investment fund, and monetary trust. The characteristics and the nature of risks related to unconsolidated structured entities over which the Group does not have control in accordance with IFRS 10 are as follows:
The ownership interests on unconsolidated structured entities that the Group hold are classified into asset securitization vehicles, structured finance, investment fund and ~~third parties,~~real-estate trust, based on the nature and the ~~structured entities have mainly issued subordinated notes to the Group, an assets transferor. The subordinated notes are designed to absorb potentially could be significant to~~purpose of the structured entities. These structured entities are generally consolidated when the Group has the power to direct the relevant activities of the entities and exposed to or have rights to variable returns from the entities. In addition, the Group involves with structured entities which are established by third parties mainly for securitization through provision of liquidity facilities including financial guarantees, which are designed to provide credit support to the entities, or investing in securities issued by structured entities or providing financing to structured entities through loans.
~~Investment funds~~
~~The Group has established a number of money market andnon-money~~ market funds where it is deemed to be acting as principal rather than agent its role as investment manager, the Group controls and hence consolidate these funds. Also the Group is deemed to control a number of third-party managed funds through its involvement as a principal in the funds.
~~Money trusts under the Trust Business Act~~
The Group has consolidated its guaranteed money trusts due to its provision of financial guarantee for investors over principal and interest or principal only. Thus, the Group may be obliged to supplement when the principal or interest of the money trusts is short of the guaranteed amount.
Unconsolidated structured entities
~~The Group has entered into various agreements with structured~~ classified as ‘asset securitization vehicles’ are entities ~~such as asset securitization vehicles, and structured finance and investment funds. Where it is determined in accordance with IFRS 10~~ that the Group has no controlling power over such structured entities, the entities are not consolidated. The nature of interests, which the Group retains, and the risks, to which the Group is exposed, of the unconsolidated structured entities are as follows:
~~Asset securitization vehicle issues~~issue asset-backed securities, ~~and redeems~~pay the principal and interest or distributes dividends on asset-backed securities ~~with~~through borrowings or profits from ~~collecting cash flows or~~the management, operation and sale of securitized assets. The Group ~~as a secondary guarantor, provides~~transfers related risks by the purchase commitments ~~for its~~of asset-backed securities or ~~guarantees to such asset securitization vehicle~~issuance of asset-backed securities through credit grants, and ~~recognizes commission income~~the structured entities recognize related interest or ~~interest income related to~~fee revenue. There are entities that provide additional funding and conditional debt acquisition commitments before the ~~commitment or guarantees. Therefore,~~Group’s financial support, but the Group ~~would be~~is still exposed to ~~risks to purchases or pays back asset-backed securities~~losses arising from the purchase of financial assets issued by the ~~vehicles~~structured entities when ~~a primary guarantor~~it fails to ~~provide~~renew the ~~financing asset securitization vehicles.~~
securities.
~~Structured finance includes investments in~~Unconsolidated structured entities classified as ‘structured financing’ include real estate project financing ~~on real estates,~~investment vehicle, social overhead capital ~~(“SOC”), infrastructure~~companies, and ~~shipping finance. They are formed as~~ special purpose vehicles for ship (aircraft) financing. Each entity ~~by funding through equity~~is incorporated as a separate company with a limited purpose in order to efficiently pursue business goals. ‘Structured financing’ is a financing method for large-scale risky business, with investments ~~and loans from various investors. Investment decisions are~~ made ~~by the Group~~ based on feasibility of the specific business ~~outlook~~or project, instead of ~~such projects. In relation to such investments,~~credit of business owner or physical collaterals. The investors receive profits from the operation of the business. The Group recognizes interest ~~income on loans, gains~~revenue, profit or ~~losses on valuation~~loss from assessment or transactions of ~~equity investments~~financial instruments, or dividend income. ~~The structured finance is secured by additional funding agreement, guarantee or credit facilities. However, the~~With regard to uncertainties involving structured financing, ~~project would fail to return the capital of equity investments or principal of loans~~there are entities that provide financial support such as additional fund, guarantees and prioritized credit grants prior to the Group’s intervention, but the Group ~~if it~~ is ~~discontinued~~exposed to possible losses due to loss of principal from reduction in investment value or ~~did not achieve business outcome.~~irrecoverable loans arising from failure to collect scheduled cash flows and cessation of projects.
~~Investment funds~~Unconsolidated structured entities classified as ‘investment funds’ include investment trusts and private equity funds. AAn investment trust ~~is formed by contributions from various investors, operated by a manager engaged~~orders the investment and operation of funds to the trust ~~and~~manager in accordance with trust contract with profits distributed ~~proceeds from sales of investments~~ to the investors. ~~A private~~Private equity ~~fund is established in order~~funds finances money required to acquire equity securities to enable direction of management and/or improvement of ownership ~~interests in a portfolio company~~structure, with ~~exit strategy after implementing financial and operational restructuring of~~profit distributed to the ~~company.~~investors. The Group recognizes ~~unrealized gains~~pro rata amount of valuation gain or ~~losses~~loss on ~~change in value of investments in proposition of ownership interests in investments. The Group would~~investment and dividend income as an investor and may be exposed to ~~risks~~losses due to reduction in investment value.
‘Real estate trust’ is to be entrusted the underlying property for the purpose of ~~loss when~~managing, disposing, operating or developing from the ~~value~~consignor who owns the property and distributes the proceeds achieved through the trust to the beneficiary. When the consignee does not fulfill his or her important obligations in the trust contract or it is, in fact, difficult to run the business, the Group may be exposed to the threat of ~~portfolio investment is decreased.~~compensating the loss.
~~Total~~
The total assets of the unconsolidated structured ~~entities,~~entity held by the Group, the carrying ~~value~~amount of the ~~related~~ items ~~recorded,~~recognized in the financial statements, the maximum loss exposure, ~~to risks,~~ and the ~~loss recognized in conjunction with~~losses from the unconsolidated structured ~~entities as of December 31, 2016 and 2017~~entity are as ~~follows~~follows. The maximum loss exposure includes the amount of investment recognized in the financial statements and the amount that is likely to be confirmed in the future when satisfies certain conditions by contracts such as purchase arrangements, credit offerings.
December 31, 2018
Asset
securitization
vehicle Structured
finance Investment
funds
Total asset of the unconsolidated structured entities
6,796,235 58,161,494 11,138,822
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities
2,571,835 2,831,842 1,530,767
Financial assets at FVTPL
285,156 70,219 1,197,844
Financial assets at FVTOCI
281,919 48,961 —
Financial assets at amortized cost
2,003,921 2,511,055 71,150
Investments in joint ventures and associates
— 197,393 261,773
Derivative assets
839 4,214 —
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities
1,260 905 —
Derivative liabilities
116 248 —
Other liabilities (provisions)
1,144 657 —
The maximum exposure to risks
3,252,329 3,408,271 1,587,325
Investments
2,571,835 2,831,842 1,530,767
Credit facilities
680,494 576,429 56,558
Loss recognized on unconsolidated structured entities
5,764 11,609 13,868
December 31, 2019
Asset
securitization
vehicle Structured
Finance Investment
Funds Real estate
trust
Total asset of the unconsolidated structured entities
8,230,254 62,879,421 18,265,273 152,257
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities
5,128,616 2,982,217 1,411,639 57,928
Financial assets at FVTPL
324,414 28,834 1,109,621 655
Financial assets at FVTOCI
2,006,230 42,305 — —
Financial assets at amortized cost
2,796,695 2,897,620 120,072 57,273
Investments in joint ventures and associates
— 7,475 181,946 —
Derivative assets
1,277 5,983 — —
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities
184 1,291 — 2,808
Derivative liabilities
— 15 — —
Other liabilities (provisions)
184 1,276 — 2,808
The maximum exposure to risks
5,561,394 3,532,539 1,457,398 77,117
Investment assets
5,128,616 2,982,217 1,411,639 57,928
Credit facilities
432,778 550,322 45,759 19,189
Loss recognized on unconsolidated structured entities
— 4,660 34,312 5,218
(7)
As of December 31, 2017, 2018 and 2019, the share ofnon-controlling interests on the net income and equity of subsidiaries in whichnon-controlling interests are significant are as follows: (Unit: Korean Won in millions):

   December 31, 2016
   Asset
securitization
vehicle    Structured
finance    Investment
Funds
Total asset of the unconsolidated structured entities
   8,426,713    61,324,862    9,131,362
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities
   3,361,910    2,790,215    1,749,494
Loans and receivables
   65,470    2,414,044    —
Financial assets held for trading
   —    254,150    —
Available-for-sale financial assets
   1,216,446    115,843    1,664,865
Held-to-maturity financial assets
   2,079,648    —    —
Investments in joint ventures and associates
   —    —    84,629
Derivative assets
   346    6,178    —
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities
   1,363    1,224    —
Derivative liabilities
   201    362    —
Other liabilities (including provisions)
   1,162    862    —
The maximum exposure to risks
   4,263,993    3,802,210    1,749,494
Investments
   3,361,910    2,790,215    1,749,494
Purchase agreements
   28,000    —    —
Credit facilities
   834,083    970,195    —
Other commitments
   40,000    41,800    —
Loss recognized on unconsolidated structured entities
   6,353    71,185    683

   December 31, 2017
   Asset
securitization
vehicle    Structured
finance    Investment
Funds
Total asset of the unconsolidated structured entities
   7,295,601    40,172,830    13,641,135
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities
   3,215,159    2,314,043    1,138,523
Loans and receivables
   43,180    1,969,760    —
Financial assets held for trading
   —    233,428    10,160
Available-for-sale financial assets
   902,390    106,819    904,774
Held-to-maturity financial assets
   2,269,451    —    —
Investments in joint ventures and associates
   —    —    223,589
Derivative assets
   138    4,036    —
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities
   1,433    1,506    —
Derivative liabilities
   575    968    —
Other liabilities (including provisions)
   858    538    —
The maximum exposure to risks
   4,032,531    2,918,448    1,138,523
Investments
   3,215,159    2,314,043    1,138,523
Credit facilities
   817,372    604,405    —
Loss recognized on unconsolidated structured entities
   837    3,939    5,993
~~(6)~~ ~~The details of the limitations with regard to the transfer of assets or the redemption of liabilities within the Group are provided below.~~
~~Some subsidiaries are regulated by the rules of the jurisdictions, in which they were incorporated, with regard to funding or management of deposits. Also, there is the limitation that they must havepre-approval~~ ~~from their regulators in case of remittance of earnings to the Group.~~
~~(7)~~ ~~Subsidiaries of whichnon-controlling~~ ~~interests are significant to the Group’s consolidated financial statements are as follows (Unit: Korean Won in millions):~~
1) Accumulatednon-controlling interests at the end of the reporting period

   December 31, 2016    December 31, 2017    December 31, 2018    December 31, 2019
Woori Bank^(*)
   —    3,660,814
Woori Investment Bank
   73,986    119,111    130,088    151,170
Woori Asset Trust Co., Ltd
   —    40,161
Woori Asset Management Corp
   —    29,800
PT Bank Woori Saudara Indonesia 1906 Tbk
   70,249    64,877    68,250    83,315
Wealth Development Bank
   16,983    16,778    16,557    18,524
(*)
Hybrid securities issued by Woori Bank
2) Net income attributable tonon-controlling interests

   For the year ended
December 31, 2015    For the year ended
December 31, 2016    For the year ended
December 31, 2017    For the year ended December 31
       2017            2018            2019
Woori Bank^(*)
   —    —    134,421
Woori Investment Bank
   4,353    9,990    8,370    8,370    10,262    21,588
Woori Asset Management Corp
   —    —    408
PT Bank Woori Saudara Indonesia 1906 Tbk
   6,241    6,383    8,882    8,882    8,126    8,502
Wealth Development Bank
   —    611    648    648    39    427
(*)
Distribution of the hybrid securities issued by Woori Bank
3) Dividends tonon-controlling interests

   For the year ended
December 31, 2015    For the year ended
December 31, 2016    For the year ended
December 31, 2017
PT Bank Woori Saudara Indonesia 1906 Tbk
   778    1,242    1,513
   For the year ended December 31
       2017            2018            2019
PT Bank Woori Saudara Indonesia 1906 Tbk
   1,513    2,082    1,981
2. ~~SIGNIFICANT~~ BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
(1) Basis of presentation
The Group’s consolidated financial statements are prepared in accordance with ~~International~~ Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The Group operates primarily in Korea and its official accounting records are maintained in Korean Won. The United States dollar (“U.S. dollar” or “US$” or “USD”) amounts are provided herein as supplementary information solely for the convenience of readers outside Korea. Korean Won amounts are expressed in U.S. Dollars at the rate of ~~1,067.42~~1,155.5 Korean Won to US$1.00, the noon buying exchange rate in effect on December 31, ~~2017,~~2019, as quoted by the Federal Reserve Bank of New York in the United States. Such convenience translation into U.S. Dollars should not be construed as representations that Korean Won amounts have been, could have been, or could in the future be, converted at this or any other rate of exchange.
The significant accounting policies ~~that have been~~ applied ~~for~~in the preparation of ~~the~~ consolidated financial statements as of and for the year ended December 31, ~~2017~~2019 are ~~described below. There have not been changes~~stated below, and the accounting policies applied are identical to ones used in the ~~significant accounting policies~~preparation of previous periods’ consolidated financial statements, except for the ~~impacts from the adoptions~~effects of ~~accounting~~adopting new standards or interpretations ~~which are~~as explained below.
The ~~Group’s~~ consolidated financial statements ~~have been~~are prepared ~~based on~~at the end of each reporting period in historical cost ~~method~~basis, except for ~~specific~~certainnon-current assets and ~~certain~~ financial assets that are either revalued or ~~liabilities reported at~~measured in fair value. Historical cost is generally ~~based on~~measured at the fair value of ~~the~~ consideration given ~~in exchange for goods and services.~~to acquire assets.
The consolidated financial statements of the Group were approved for the issuance on March 3, 2020 by the ~~board~~Board of ~~directors~~Directors, and the final approval will be made in the annual general shareholders’ meeting on March ~~2, 2018.~~25, 2020.
1) The ~~Group has newly adopted the following new~~ standards and interpretations that ~~affected~~are newly adopted by the ~~Group’s accounting policies.~~
~~Amendments to IAS 7—~~~~Statement of Cash Flows~~
~~The amendments require an entity to provide disclosures that enable users of financial statements to evaluate~~Group during the current period, and the changes in ~~liabilities arising from financing activities, including both cash~~accounting policies thereof are as follows:
IFRS 9 ‘Financial Instruments,’ IFRS 7 ‘Financial Instruments: Disclosure’ amendments
The Group has adopted the amendments of IFRS 9 and~~non-cash~~ ~~changes. Additional disclosure required related to~~ IFRS 7 for the first time ~~application of these amendments~~ in the current ~~year are in note 6. Consistent~~year. The amendments mainly deal with the ~~transition provisions~~addition of temporary exceptions from applying specific hedge accounting requirements while the uncertainty arises from interest rate benchmark reform. The amendment requires that for the purpose of determining whether a forecast transaction (or a component thereof) is highly probable, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually ornon-contractually specified) are based is not altered as a result of interest rate benchmark reform. When applying the prospective assessment, the amendment further requires that an entity shall assume that the hedged risk or the interest rate benchmark on which the hedged item or the hedging instrument is based is not altered as a result of the reform. Additionally, for a hedge of anon-contractually specified benchmark component of interest rate risk, an entity shall apply the requirement that the risk component shall be separately identifiable only at the inception of the hedging relationship. Meanwhile, an entity shall prospectively cease applying the temporary exceptions to a hedged item at the earlier of: (a)when the uncertainty arising from interest rate benchmark reform is no longer present with respect to the timing and the amount of the interest rate benchmark-based cash flows of the hedged item; and (b)when the hedging relationship that the hedged item is part of is discontinued. Note 26 sets out details of the hedge accounting applied by the Group. These amendments will be effective from January 1, 2020 but the Group has ~~not disclosed comparative information~~applied such amendments in current year as the early adoption is permitted.
IFRS 16 Leases
The Group initially applied IFRS 16 on January 1, 2019.
IFRS 16 introduces an accounting model for the ~~prior period. Apart from~~single lessee and as a result, the ~~additional disclosure in note 6,~~Group, as a lessee, recognizesright-of-use assets which represent a lessee’s right to use an underlying asset and lease liabilities which represent an obligation to make lease payments. An accounting model for the lessor is similar to the previous accounting policy.
The Group recognized the cumulative effects due to the initial application of ~~these amendments has no material impact~~IFRS 16 on January 1, 2019, which is the date of initial application. Therefore, the comparative financial information applies IAS 17 and IFRIC 4 as reported previously, and was not restated. The details of the changes to the accounting policy are described below.
i) Definition of lease
Previously, the Group determined whether an arrangement is, or contains, a lease on the ~~disclosures or the amounts recognized in the Group’s consolidated financial statements.~~
~~Amendments to IAS 12—~~~~Income Taxes~~
~~The amendments clarify that in evaluating the deferred tax assets arising from deductible temporary difference of debt instruments measured at fair value, the carrying amount of~~arrangement date by applying IFRIC 4 ‘Determining whether an ~~asset does not limit the estimation of probable future taxable profits. The application of these amendments has no material impact~~arrangement contains a lease’ which focused on ~~the disclosures or the amounts recognized in the Group’s consolidated financial statements.~~
Other than the amendment stated above, there are several annual improvements in the current period, but the application of the amendments has had no material effect on the Group’s consolidated financial statements.
2)‘risks and consideration’. The Group has started to determine whether the contract is, or contains, a lease, based on the new definition of a lease. Under IFRS 16, a contract determines whether a lease includes control of the use of an underlying asset that is identified in exchange for consideration.
On the date of initial application for IFRS 16, the Group elected to apply a practical expedient which does not require the Group to reassess whether the contract is a lease. The Group applied IFRS 16 only to the ~~following IFRSs that have been issued but are not yet effective:~~
~~Enactments to IFRS 9—~~~~Financial Instruments~~
IFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classificationcontracts
that were previously identified as a lease and ~~measurement~~did not reassess the contracts that were not identified as a lease in line with IAS 17 and IFRIC 4. Therefore, the definition of ~~financial liabilities and for derecognition, and in November 2013~~lease under IFRS 16 is only applicable to include the new requirements for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’(FVTOCI) measurement category for certain simple debt instruments. This standards supersedes IAS 39—~~Financial Instruments: Recognition and Measurement~~~~, and will be applied for annual periods beginning on~~contracts that are entered into or modified after January 1, ~~2018.~~2019.
~~In principle, IFRS 9 must be applied retrospectively. However, there are~~For the agreed or revalued date of the contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease andnon-lease components.
The Group elected not to recognizeright-to-use assets and lease liabilities for certain ~~exemptions to the application~~leases of ~~retroactive approach such as presenting comparative information on classification, measurement~~low-value assets (e.g. IT facilities) and ~~impairment of financial instruments. In addition, IFRS 9 is applied prospectively for hedge accounting with exceptions such as accounting for the time value of options.~~short-term leases (less than one year). The Group will ~~apply~~recognize the ~~standard retrospectively,~~related lease payments as expenses equally over the lease period.
IFRS Interpretations Committee published its interpretation of ‘Lease Period and Lease Improvement Useful Life’ as of December 16, 2019. The Interpretation Committee discussed a question about how to determine the lease term for cancellable or renewable leases and according to the interpretation, the lease term will depend on both the termination penalties in the contract and the broader economics of the contract. Agenda decisions issued by the Interpretations Committee do not have an application date, but are expected to be implemented as soon as possible. The Group is currently assessing the impact of the agenda decision and does not expect a material impact to the financial statements.
ii) Lessee
The Group leases various assets, including buildings, vehicles and IT equipment.
Previously, the Group classified its leases either as operating leases or as finance leases based on whether the lease substantially transfers the risk and reward of owning the underlying assets. According to IFRS 16, the Group recognizesright-of-use assets and lease liabilities for most of its leases, which means most of its leases are presented in the statement of financial position.
For theright-of-use assets that do not satisfy the definition of an investment property, the Group presents those assets as the same item as the item that the corresponding underlying asset would have been presented for.Right-of-use assets that meet the definition of investment properties would be presented as investment properties.
The Group presents lease liability as other financial liabilities in the consolidated statement of financial position.
iii) Transitional provisions on lease
On the date of initial application, a lease classified as an operating lease in accordance with IAS ~~8 “Accounting Policies, Changes in Accounting Estimates and Errors”, but will not restate previous periods provided that it~~17 is ~~not possible to do so without~~measured at present value of the ~~use~~remaining lease payments discounted at the incremental borrowing rate of ~~hindsight. Because~~the subsidiary as of ~~this,~~January 1, 2019. However, the Group ~~will recognise any difference between~~chose an exception that does not apply the ~~previous carrying~~lessee’s recognition, measurement and presentation on low value asset leases. Theright-of-use asset is measured as follows:
The same amount ~~and~~as lease liability(pre-paid or incurred (unpaid) lease payments are adjusted). The Group applies this method to all leases.
When the ~~carrying amount~~Group applies IFRS 16 to the leases classified as operating leases in accordance with IAS 17, following practical expedients are used:
Opening direct costs are excluded from the measurement of theright-of-use asset at the ~~beginning~~date of initial application.
An entity should apply IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ right before the ~~annual reporting period that~~date of initial application to determine whether a lease is a loss-bearing contract and therefore conduct an impairment review.
Theright-of-use assets and lease liabilities are not recognized for short-term leases (residual term less than a year)
If the contract includes a lease extension or exit option, use hindsight to determine the lease term.
iv) Impacts to the financial statements
a) Impacts at date of initial application
At the date of initial application of IFRS ~~9 (January 1, 2018) in~~16, the ~~opening retained earnings~~Group additionally recognized theright-of-use assets and lease liabilities, and the impacts as of January 1, ~~2018.~~
~~The Group has completed the design and implementation of the internal controls and/or financial reporting processes related to the presentation of financial instruments~~2019 are as follows (Unit: Korean Won in ~~order to adopt IFRS 9. The Group has completed a financial impact analysis on the 2017 financial statements based on available information as ofyear-end~~ ~~in order to determine the impact of adopting IFRS 9 for the first time. The expected financial impact of each key issue on the financial statement, is as follows.~~
~~a) Classification and Measurement of Financial Instruments~~
When IFRS 9 is adopted, all recognized financial assets that in scope are subsequently measured at either amortized cost, fair value through other comprehensive income (FVTOCI), or fair value through profit or loss (FVTPL) as shown below, based on the business model for managing financial assets and based on the nature of contractual cash flows arising from the financial assets. Also, when hybrid contracts contain financial asset as its host contract, the embedded derivative will not be bifurcated as the whole hybrid contract would be classified as a financial asset.millions):


~~Business Model~~
January 1,
2019
~~Nature of the contractual cash flow~~Right-of-use assets presented as premises and equipment(*)
   435,791
~~Collection of the~~
~~contractual cashflow~~Lease liability^(*)

~~Collection of the contractual~~
~~cashflow and sale of asset~~
377,030
~~Sale of asset, others~~
~~Principal and Interest only~~
~~Amortized Cost~~^(*1) ~~FVTOCI~~^(*1) ~~FVTPL~~
~~Other than the above~~
~~FVTPL~~^(*2)

(*1)) ~~An irrevocable election~~
The differences have occurred due to prepaid, unpaid lease payment, transfer, etc. and there is ~~available to designate a financial asset to be classified as FVTPL, for the purpose of eliminating or reducing accounting discrepancies.~~
~~(*2)~~ ~~For equity securities held for purposes other than short-term trading, an irrevocable election is available to designate them as FVTOCI financial assets.~~no effect on retained earnings.
AsWhen measuring lease liabilities for leases that were previously classified as operating lease, the ~~requirements to classify a financial asset~~Group used its incremental borrowing rate as ~~either amortized cost or FVTOCI are more stringent in IFRS 9 than in IAS 39, the variability~~ of ~~net income may increase~~January 1, 2019 as the ~~amount of FVTPL financial assets~~discount rate. The applied weighted-average incremental borrowing rate is ~~increased due to the adoption of IFRS 9.~~
~~As ofyear-end~~ ~~the Group currently holds loans and receivables amounting to 267,106,204 million Won,held-to-maturity~~ financial assets amounting to 16,749,296 million Won. This amount includes 51,653 million Won of hybrid contracts in which the host contract, after separating the embedded derivatives, is a debt security. In addition, The group also holds~~available-for-sale~~ ~~financial assets amounting to 15,352,950 million Won, and FVTPL financial assets (except derivatives) amounting to 2,727,302 million Won as of year end in accordance with IAS 39.~~
According to IFRS 9, a financial asset may be measured at amortized cost only when its cashflows are solely principal and interest on specified dates on the contract and when the purpose of holding such asset is only to receive the contractual cashflows.
~~The estimated impact on the classification and measurement of Group’s financial assets (except derivatives) as ofyear-end~~ ~~is presented as follows. The following information is constructed from the accounting system for financial instruments built for the purpose of adopting IFRS 9.~~
~~(Unit : Korean Won in millions)~~

Classification
per IAS 39

Classification
per IFRS 9
   Carrying
Amount per
IAS 39    Carrying
Amount per
IFRS 9
Loans and receivables (Deposits)
   Amortized cost    8,870,835    8,870,835
Financial assets at FVTPL (Deposits)
   FVTPL    25,972    25,972
Financial assets at FVTPL (Debt securities)
   FVTPL    2,654,027    2,654,027
AFS financial assets (Debt securities)
   FVTPL    46,855    46,855
AFS financial assets (Debt securities)
   FVTOCI    12,874,209    12,874,209
AFS financial assets (Debt securities)
   Amortized cost    308,181    322,300
Held-to-maturity financial assets (Debt securities)
   Amortized cost    16,749,296    16,749,296
Financial assets at FVTPL (Equity securities)
   FVTPL    47,304    47,304
AFS financial assets (Equity securities)
   FVTPL    1,273,498    1,274,716
AFS financial assets (Equity securities)
   FVTOCI    850,207    850,207
Loans and receivables (Loans)
   FVTPL    279,032    280,001
Loans and receivables (Loans)
   Amortized cost    253,014,491    253,014,491
Loans and receivables (Other financial assets)
   Amortized cost    6,772,088    6,772,088




Total financial assets except derivatives
   303,765,995    303,782,301




~~Among the financial assets measured at amortized cost, loans and receivables andheld-to-maturity~~ ~~financial assets amounting to 279,032 million Won and AFS financial assets amounting to 1,320,353 million Won would be reclassified to FVTPL financial assets as a result of adopting IFRS 9.~~
~~b) Classification and Measurement of Financial Liabilities~~
According to the IFRS 9, the amount of changes in the fair value of financial liabilities measured at FVTPL due to changes in credit risk is presented as part of other comprehensive income, and such amount is not recycled subsequently in profit or loss. However, when recognizing the fair value changes in other comprehensive income causes or magnifies accounting discrepancies, the amount is recognized in profit or loss instead.
~~As ofyear-end~~ the Group holds financial liabilities amounting to 294,809,262 million Won, and out of this amount 251,796 million Won has been designated as FVTPL financial liabilities. In relation to these financial liabilities, the increase in fair value amounting to 31,275 million Won has been recognized as losses for the year ended 2017 in accordance with IAS 39.
~~The results of the analysis conducted to determine the financial impact of applying IFRS 9 on FVTPL financial liabilities as ofyear-end~~ ~~show that the cumulative changes in fair value of FVTPL financial liabilities as a result of changes in credit risk amounted to 133 million Won.~~
~~c) Impairment: Financial assets and Contract assets~~
IFRS 9 requires the recognition of allowance for expected credit losses for debt instruments, lease receivables, contract assets, loan commitments and financial guarantee contracts measured at either amortized cost or FVTOCI.
~~The allowance to be recognized under IFRS 9 is the amount of expected12-month~~ ~~credit loss or the expected lifetime credit loss, according to the 3 stages of credit risk deterioration since initial recognition as shown below.~~2.0~5.6%.

   January 1,
2019
~~Stage 1~~Operating leases as of December 31, 2018
   398,147
~~Stage 2~~- Application of exemption rule for low value assets leases

~~Stage 3~~
(616 )
~~Credit risk has not~~
~~significantly increased~~
~~since initial recognition(*)~~- Application of exemption rule for leases with remaining terms are less than 12 months at the time of transition
   (187 )
~~Credit risk has~~
~~significantly increased~~
~~since initial recognition~~Operating lease agreement after subtraction of exemption rule applied items as of December 31, 2018
   397,344
~~Credit has been~~
~~impaired~~
~~Allowance for expected credit losses~~Amount discounted with incremental borrowing rate at the date of initial application(January 1, 2019)
   ~~Expected12-month~~ ~~credit losses: Expected credit losses due to possible defaults on financial instruments within12-month~~ ~~period from theyear-end.~~ 377,030

~~Expected lifetime credit losses:~~
~~Expected credit losses from all possible defaults during~~
Lease liabilities recognized at the ~~expected lifetime~~date of ~~the financial instruments.~~initial application(January 1, 2019)
377,030
~~(*)~~ Credit risk may be considered to not have been significantly increased when credit risk is low at the reporting date. The Group considers that a financial asset’s credit risk is low when its credit risk rating is equivalent to the generally understood definition of “investment grade”.
~~Meanwhile, for purchased or originated credit impaired assets,~~b) Impacts during the ~~allowance for expected credit losses per IFRS 9 is the amount of cumulative changes in the expected lifetime credit losses after its initial recognition.~~
~~Determining a significant increase in credit risk since initial recognition~~transition
The Group ~~assess when a significant increase~~recognized depreciation expenses and interest expenses instead of the operating lease expenses for the leases in ~~credit risk has occurred based on quantitative~~line with IFRS 16. The Group recognized depreciation expenses of 229,727 million Won and ~~qualitative assessments. For~~interest expenses of 9,086 million Won for the ~~financial assets subject to~~lease for the ~~impairment provision of IFRS 9, it~~year ended December 31, 2019.
3) It is ~~considered to have a significant increase in credit risk and are moved to stage 2 when~~believed that the following ~~indicator exists:~~
~~Credit rating decrease by more than the agreed threshold relative to the credit rating at initial recognition~~
~~Accounts that is classified as precautious level defined by Financial Supervisory Service~~
~~Borrower has financial difficulties or has early warning signal as defined by the Group~~
~~Backstop criteria—accounts that are 30 calendar days or more past due.~~
~~Forward-looking information~~
Credit losses are the expected cash shortfalls from what is contractually due over the expected life of the financial instrument, discounted at the original effective interest rate. Expected credit losses (ECL) are the unbiased probability-weighted credit losses determined by evaluating a range of possible outcomes and considering future economic conditions. The Group incorporated forward-looking information by using statistical analysis on various macroeconomic variables. The Group has integrated such results in modelling probability of default (PD)
~~Modeling techniques~~
ECL are calculated by multiplying three main components, being the PD, loss given default and the exposure at default, discounted at the original effective interest rate. ECL is measured at the individual financial instrument level, however a collective approach where financial instruments with similar risk characteristics are grouped together, with apportionment to individual financial instruments, is used where effects can only be seen at collective level.
For the IFRS 9 impairment assessment, the Group developed models are used to determine the probability of default, loss given default and exposure at default. For stage 2 and 3, the Group applies lifetime PDs but uses 12 month PDs for stage 1. The ECL drivers of PD, exposure at default and loss given default are modelled at an account level which considers historical data available by the Group.
~~As ofyear-end~~ the Group holds loans and receivables amounting to 267,106,204 million Won in accordance with IAS 39. In relation to this amount, the Group has recognized allowance for credit losses amounting to 1,830,242 million Won.
~~The expected impact on the allowance for credit losses as ofyear-end~~ ~~using the Group’s system for allowances is as follows.~~
~~(Unit : Korean Won in millions)~~

   Allowance for credit losses
per IAS 39 (A)    Allowance for credit losses
per IFRS 9 (B)    Increases(B-A)
Deposits
   2,458    3,092    634
Debt securities
   —    9,331    9,331
AFS debt securities
   —    4,253    4,253
Held-to-maturity debt securities
   —    5,078    5,078
Loan receivables and other financial assets
   1,827,785    2,075,752    247,967
Guarantees
   183,247    192,376    9,129
Loan commitments
   66,115    104,887    38,772






Total
   2,079,605    2,385,438    305,833






~~d) Hedge accounting~~
The requirements for hedge accounting in IFRS 9 has become more lenient as compared to IAS 39. That is, more financial instruments may now be considered to be a hedged item and/or a hedging instrument, the quantitative basis for evaluating high hedge effectiveness (80~125%) has been abolished, and the retroactive assessment requirement has also been abolished. These allow the firms to concentrate on hedging activities.
~~There are no significant impacts to the Group’s financial statements related to hedge accounting as a result of adopting IFRS 9.~~
~~e) Effect on regulatory capital ratios~~
~~Based on the analysis on IFRS 9, there are no significant impacts to the regulatory capital ratios.~~
~~Enactments to IFRS 15—~~~~Revenue from Contracts with Customers~~
The core principle under IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments introduces a~~5-step~~ approach to revenue recognition and measurement: 1) Identify the contract with a customer, 2) Identify the performance obligations in the contract, 3) Determine the transaction price, 4) Allocate the transaction price to the performance obligations in the contract, 5) Recognize revenue when (or as) the entity satisfies a performance obligation. This standardissued, revised standards will ~~supersede IAS 11—Construction Contracts, IAS18-~~ Revenue, IFRIC 13—Customer Loyalty Programmes, IFRIC 15—Agreements for the Construction of Real Estate, IFRIC 18—Transfers of Assets from Customers, and SIC 31—Revenue-Barter Transactions Involving Advertising Services. The enactment is effective for annual periods beginning on or after 1 January 2018. The Group does not ~~expect the enactments to~~ have a significant impact on the ~~consolidated~~Group.
IFRIC 23 Uncertainty over Income Tax Treatments (Issued)
IFRS 9 Financial Instruments (Revised)
IAS 28 Investment in Associates and Joint Ventures (Revised)
IAS 19 Employee Benefits (Revised)
IFRS 15 Revenue from Contracts with Customers (Revised)
Annual Improvements to IFRSs 2015-2017 Cycle
The annual improvements include partial amendments of IAS 12 ‘Income Tax,’ IAS 23 ‘Borrowing Costs,’ IFRS 3 ‘Business Combination’ and IFRS 11 ‘Joint Arrangements.
2) The details of IFRSs that have been issued and published as of the date of issue approval of financial ~~statements.~~statements but have not yet reached the effective date, and which the Group has not applied at an earlier date are as follows:
~~Enactments~~
Revised Conceptual Framework for Financial Reporting
Revised IFRS 3 ‘Business Combinations’
Revised IAS 1 ‘Presentation of Financial Statements’ and IAS 8 ‘Accounting policies, Changes in Accounting Estimates and Errors’
It will be applied to ~~IFRS 16—Leases~~
IFRS 16 introduces a comprehensive model for the identification of lease arrangements and accountings treatments for both lessors and lessees. IFRS 16 will supersede the current lease guidance including IAS 17 Leases and the related interpretations. The enactments are effective for annual periodsperiod beginning on or after January 1, ~~January 2019.~~
~~IFRS 16 distinguishes leases and service contracts on the basis of whether an identified asset~~2020. It is ~~controlled by a customer. Distinctions of operating leases and finance leases are removed for lessee accounting and is replaced by model where aright-of-use~~ ~~asset and corresponding liability have to be recognized for all leases by lessees except for short-term leases and leases of low value assets.~~
~~Theright-of-use~~ asset is initially measured at cost and subsequently measured at cost (subject to certain exceptions) less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially measured at the present value of the lease paymentsbelieved that ~~are~~revised standards listed above, will not paid at that date. Subsequently, the lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications, amongst others. Furthermore, the classification of cash flows will also be affected as operating lease payments under IAS 17 are presented as operating cash flows; whereas under the IFRS 16 model, the lease payments will be split into a principal and an interest portion which will be presented as financing and operating cash flows respectively.
In contrast to lessee accounting, IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17, and continues to require a lessor to classify a lease either as an operating lease or a finance lease. Furthermore, extensive disclosures are required by IFRS 16.
~~In contrast, 1) for finance leases where the Group is a lessee and 2) in cases where the Group is a lessor, the Group do not anticipate that the application of IFRS 16 will~~ have a significant impact on the ~~amounts recognized~~Group.
3) The standards and interpretations that are newly adopted by the Group during the previous period, and the changes in accounting policies thereof are as follows:
Adoption of IFRS 9 – Financial instruments
The Group initially applied IFRS 9 and related amendments made to other standards during the previous period, with January 1, 2018 as the date of initial application. IFRS 9 introduces new rules on: 1) classification and measurement of financial assets and financial liabilities, 2) impairment of financial assets, and 3) hedge accounting. Additionally, the Group adopted consequential amendments to IFRS 7 Financial Instruments: Disclosures that were applied to the disclosures for 2018.
a) Classification and measurement of financial assets
All financial assets included in the scope of IFRS 9 are subsequently measured at amortized cost or fair value based on the Group’s ~~consolidated~~business model for the management of financial ~~statements.~~assets and the nature of the contractual cash flows of the financial assets.
~~Amendments~~Debt instruments that are held within a business model whose objective is to ~~IFRS 2—~~~~Share-based Payment~~collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods (Financial assets at amortized cost).
Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at fair value through other comprehensive income (Financial assets at fair value through other comprehensive income (“FVTOCI”)).
All other debt instruments and equity instruments are measured at their fair value at the end of subsequent accounting periods, and any change in the fair value is recognized as profit or loss (Financial assets at fair value through profit or loss (“FVTPL”)).
Notwithstanding the foregoing, the Group may make the following irrevocable choice or designation at the time of initial recognition of a financial asset.
The ~~amendments include: 1) when measuring~~Group may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of ~~share-based payment,~~an investment in an equity instrument within the ~~effects~~scope of ~~vesting andnon-vesting~~ ~~conditions on the~~this standard that is neither held for trading nor is a contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies.
At initial recognition, financial assets at amortized cost or FVTOCI may be irrevocably designated as financial assets at fair value through profit or loss mandatorily measured at fair value if doing so eliminates or significantly reduces a measurement of cash-settled share-based payment should be consistent with the measurement of equity-settled share-based payment, 2) Share-based payment transaction in which the Group settles the share-based payment arrangement net by withholding a specified portion of the equity instruments per statutory tax withholding requirements would be classified as equity-settled in its entirety, if otherwise would be classified as equity-settled without the net settlement feature, and 3) when a cash-settled share-based payment changes to an equity-settled share-based payment because of modifications of the terms and conditions, the original liability recognized is derecognized and the equity-settled share-based payment is recognized at the modification date fair value. Any difference between the carrying amount of the liability at the modification date and the amount recognized in equity at the same date would be recognized in profit and loss immediately. The amendments are effective for annual periods beginning on or ~~after January 1, 2018. The Group does not expect the amendments to have a significant impact on the consolidated financial statements.~~
~~Amendments to IAS 40—~~~~Transfers of Investment Property~~
The amendments clarify that a transfer to, or from, investment property necessitates an assessment of whether a property meets, or has ceased to meet, the definition of investment property, supported by observable evidence that a change in use has occurred. The amendments further clarify that situations other than the ones listed in IAS 40 may evidence a change in use, and that a change in use is possible for properties under construction (i.e. a change in use is not limited to completed properties).
The amendments are effective for annual periods beginning on or after January 1, 2018 with earlier application permitted. Entities can apply the amendments either retrospectively (if this is possible without the use of hindsight) or prospectively. The Group does not expect the amendments to have a significant impact on the consolidated financial statements.recognition inconsistency.
~~Enactments to IFRIC 22—~~~~Foreign Currency Transactions and Advance Consideration~~
~~The interpretation addresses how to determine the ‘date~~As of transaction’ for the purpose of determining the exchange rate to use on initial recognition of an asset, expense or income, when consideration for that item has been paid or received in advance in a foreign currency which resulted in the recognition of a~~non-monetary~~ ~~asset ornon-monetary~~ ~~liability (e.g. anon-refundable~~ ~~deposit or deferred revenue).~~
~~The interpretation specifies that~~ the date of ~~transaction is the date on which the entity initially recognizes thenon-monetary~~ ~~asset onnon-monetary~~ ~~liability arising from the payment or receipt~~initial application of ~~advance consideration. If~~IFRS 9, there are ~~multiple payments~~no debt instruments classified either as financial assets at amortized cost or ~~receipts~~FVTOCI that are designated as financial assets at fair value through profit or loss.
When debt instruments measured at FVTOCI are derecognized, the cumulative gain or loss recognized in ~~advance,~~other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. On the ~~interpretation requires an entity~~other hand, for equity instruments designated as financial assets at fair value through other comprehensive income, cumulative gains or losses previously recognized in other comprehensive income are subsequently reclassified to ~~determine~~retained earnings. Debt instruments measured subsequently at amortized cost or at FVTOCI are subject to impairment.
The classification and measurement of financial assets and liabilities in accordance with IFRS 9 and IAS 39 as of January 1, 2018 are as follows (Unit: Korean Won in millions):

Classification in
accordance with
IAS 39

Classification in
accordance with
IFRS 9
Amount in
accordance with
IAS 39 Reclassification Remeasurement^(*2) Amount in
accordance with
IFRS 9
Deposit

Loans and receivables

Loan and other financial assets at amortized cost
8,870,835 — — 8,870,835
Deposit

Financial assets at FVTPL

Financial assets at FVTPL
25,972 — — 25,972
Debt securities

Financial assets at FVTPL

Financial assets at FVTPL^(*1)
2,654,027 — — 2,654,027
Equity securities

Financial assets at FVTPL

Financial assets at FVTPL^(*1)
47,304 — — 47,304
Derivative assets

Financial assets at FVTPL

Financial assets at FVTPL^(*1)
3,115,775 (2,137 ) — 3,113,638
Equity securities

AFS financial assets

Financial assets at FVTPL^(*1)
1,273,498 1,219 — 1,274,717
Equity securities

AFS financial assets

Financial assets at FVTOCI
850,207 — — 850,207
Debt securities

AFS financial assets

Financial assets at FVTPL
46,855 — — 46,855
Debt securities

AFS financial assets

Financial assets at FVTOCI
12,874,209 — — 12,874,209
Debt securities

AFS financial assets

Securities at amortized cost
308,181 — 14,119 322,300
Debt securities

HTM financial assets

Securities at amortized cost
16,749,296 — — 16,749,296
Loans

Loans and receivables

Financial assets at FVTPL^(*1)
279,032 918 50 280,000
Loans

Loans and receivables

Loan and other financial assets at amortized cost
253,014,491 — — 253,014,491
Derivative assets (Designated for hedging)

Derivative assets (Designated for hedging)

Derivative assets (Designated for hedging)
59,272 — — 59,272
Other financial assets

Loans and receivables

Loan and other financial assets at amortized cost
6,772,088 — — 6,772,088

Total financial assets
306,941,042 — 14,169 306,955,211

Classification in
accordance with
IAS 39

Classification in
accordance with
IFRS 9
Amount in
accordance with
IAS 39 Reclassification Remeasurement^(*2) Amount in
accordance
with IFRS 9
Deposit due to customers

Financial liabilities at FVTPL

Financial liabilities at FVTPL
25,964 — — 25,964
Deposit due to customers

Financial liabilities at amortized cost

Financial liabilities at amortized cost
234,695,084 — — 234,695,084
Borrowings

Financial liabilities at amortized cost

Financial liabilities at amortized cost
14,784,706 — — 14,784,706
Debentures

Financial liabilities at FVTPL

Financial liabilities at FVTPL
91,739 — — 91,739
Debentures

Financial liabilities at amortized cost

Financial liabilities at amortized cost
27,869,651 — — 27,869,651
Equity-linked securities

Financial liabilities at FVTPL

Financial liabilities at FVTPL
160,057 — — 160,057
Derivatives liabilities

Financial liabilities at FVTPL

Financial liabilities at FVTPL
3,150,149 — — 3,150,149
Derivatives liabilities (Designated for hedging)

Derivatives liabilities (Designated for hedging)

Derivatives liabilities (Designated for hedging)
67,754 — — 67,754
Other financial liabilities

Financial liabilities at amortized cost

Financial liabilities at amortized cost
13,892,461 — — 13,892,461
Provision for financial guarantee

Provision

Financial liabilities at amortized cost
71,697 — — 71,697

Total financial liabilities
294,809,262 — — 294,809,262

(*1)
Under IAS 39, the embedded derivatives out of hybrid financial instruments were accounted for as derivative assets or liabilities if the criteria for separation of the embedded derivatives were met; and the host contracts in those instruments were recorded asavailable-for-sale financial assets or loans and receivables respectively. However, since IFRS 9 requires financial instruments to be accounted for based on the terms of the entire financial instrument, hybrid financial assets are revalued and classified as financial assets at fair value through profit or loss.
(*2)
The remeasurement effect due to expected credit losses is not included (The remeasurement effect of expected credit losses is as follows: b) Impairment of financial assets).
At the date of ~~transaction~~the initial application of IFRS 9, there were no financial assets or liabilities measured at FVTPL that were reclassified to FVTOCI or amortized cost category.
The financial assets at FVTPL or FVTOCI that are reclassified to the amortized cost measurement category as of the date of initial application of IFRS 9, and the related valuation gain or loss and fair value of the financial assets as of December 31, 2018 had it not been reclassified, are as follows (Unit: Korean Won in millions):
Account subject

Category before the adoption of
IFRS 9
   Amount of valuation gain/loss
had it not been reclassified    Fair value
Debt securities^(*)
   AFS financial assets    2    257,665
(*)
Those financial assets that are removed from the books as of December 31, 2018 are not presented in the table above.
b) Impairment of financial assets
The impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred credit losses under IAS 39. Under the impairment approach in IFRS 9, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, the Group accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses should be updated at each ~~payment or receipt of advance consideration.~~ reporting date to reflect changes in credit risk since initial recognition.
The Group is required to recognize the expected credit losses for financial instruments measured at amortized cost or FVTOCI (debt instrument), and unused loan commitments and financial guarantee contracts that are subject to the impairment provisions of IFRS 9. In particular, IFRS 9 requires the Group to measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument has increased significantly since initial recognition, or if the financial instrument is a purchased or originated credit-impaired financial asset. If the credit risk of a financial instruments does not ~~expect~~increase significantly after initial recognition (excluding “purchased or originated credit-impaired loans” - for financial assets already impaired at initial recognition), the ~~enactments to have a significant impact~~Group measures the loss allowance on the ~~consolidated~~ financial ~~statements.~~instruments at the amount equivalent to the expected12-month credit loss.
~~The interpretation is effective for annual periods beginning on~~Management assessed the impairment of the Group’s financial assets, lending arrangements and financial guarantees at the date of initial application by using reasonable and supportive measures that can be used without undue cost or ~~after~~effort in determining the credit risk of the financial instruments at initial recognition in accordance with IFRS 9 and in comparing above credit risk with the credit risk at the date of initial application. As of January 1, 2018, the results of the assessment are as follows (Unit: Korean Won in millions):

Classification in
accordance with
IAS 39

Classification in
accordance with
IFRS 9
Loss allowance
in accordance
with IAS
39(A) Loss allowance
in accordance
with IFRS 9
(B) Increases
(B-A)
Deposit

Loans and receivables

Loans and other financial assets at amortized cost
2,458 3,092 634
Debt securities AFS securities

AFS financial assets

Financial assets at FVTOCI
— 4,236 4,236
HTM securities

HTM financial assets

Securities at amortized cost
— 5,078 5,078
Loans and other financial assets

Loans and receivables

Loans and other financial assets at amortized cost
1,827,785 2,076,873 249,088
Payment guarantee
183,247 192,924 9,677
Loan commitment
66,115 104,985 38,870

Total
2,079,605 2,387,188 307,583

c) Classification and measurement of financial liabilities
One of the major changes related to the classification and measurement of financial liabilities as a result of the adoption of IFRS 9 is the accounting for change in the fair value of financial liabilities designated as at fair value through profit or loss due to the changes in issuer’s own credit risk. The Group recognizes the effect of changes in the credit risk of financial liabilities designated as at FVTOCI in other comprehensive income, except for cases where it creates or enlarges accounting mismatch of the profit or loss. Changes in fair value due to credit risk of financial liabilities are not subsequently reclassified to profit or loss, but are reclassified as retained earnings when financial liabilities are derecognized.
In accordance with ~~earlier~~IAS 39, the entire of changes in fair value of financial liabilities designated as at FVTPL are recognized in profit or loss. As of January 1, 2018, the Group designated 251,796 million Korean Won of FVTPL out of 294,813,795 million of financial liabilities to be measured at FVTPL, and recognized 133 million Korean Won as accumulated other comprehensive loss in relation to the changes in own credit risk of financial liabilities.
d) Hedge accounting
The new hedge accounting model maintains three types of hedge accounting. However, it introduced more flexibility in the types of transactions that are eligible for hedge accounting and expanded the types of hedging instruments andnon-financial hedge items that qualify for hedge accounting. The standard related to the evaluation of hedge accounting has been amended as a whole, where it is now replaced by the principle of “economic relationship” between the hedged item and the hedging instrument. Retrospective assessment of the hedging effectiveness is no longer required. Additional disclosure requirements have been introduced in relation to the Group’s risk management activities.
In accordance with the transitional provisions of IFRS 9 on hedge accounting, the Group adopted the hedge accounting provisions of IFRS 9 prospectively from January 1, 2018. As of the date of initial application, ~~permitted. Entities can apply~~ the ~~interpretation either retrospectively or prospectively. Specific transition provisions apply~~Group concluded that the hedging relationship in accordance with IAS 39 is appropriate for hedge accounting under IFRS 9, thus the hedging relationship is considered to ~~prospective application.~~exist continually. Since the major conditions for hedging instruments and the hedged items are consistent, all hedging relationships are consistent within the effectiveness assessment requirements of IFRS 9. The Group has not designated a hedging relationship in accordance with IFRS 9 in which the hedge relationship would not have met the requirements for hedge accounting under IAS 39.
e) Effect on equity as a result of adoption of IFRS 9
The effect on equity due to the adoption of IFRS 9 as of January 1, 2018 is as follows (Unit: Korean Won in millions):
Impact on accumulated other comprehensive loss due to financial assets at FVTOCI, etc.
Amount
Balance as of December 31, 2017 (prior to IFRS 9)
(89,723 )
Adjustments
(392,177 )
Reclassification ofavailable-for-sale financial assets to financial assets at FVTPL
(152,124 )
Recognition of expected credit losses of debt securities at FVTOCI
4,293
Reclassification of available for sale financial assets(equity securities) to financial assets at FVTOCI
(397,508 )
Effect on changes in credit risk of financial liabilities at fair value through profit or loss designated as upon initial recognition
(133 )
Others
3,499
Income tax effect
149,796
Balance as of January 1, 2018 (based on IFRS 9)
(481,900 )
Retained earnings impact
Amount
Balance as of December 31, 2017 (prior to IFRS 9)
15,620,006
Adjustments
177,091
Reclassification ofavailable-for-sale financial assets to financial assets at FVTPL
152,124
Recognition of expected credit losses of debt instruments at FVTOCI
(4,293 )
Reclassification ofavailable-for-sale financial assets(equity securities) to financial assets at FVTOCI
397,508
Effect on revaluation of financial assets at amortized cost from loan and receivables or AFS financial assets
282
Recognition of expected credit losses of financial assets at amortized cost which were previously loan and receivables
(240,683 )
Effect on provision for guarantees and unused loan commitments on liabilities
(48,548 )
Effect on changes in credit risk of financial liabilities at fair value through profit or loss designated as upon initial recognition
133
Others
(4,950 )
Income tax effect
(74,482 )
Balance as of January 1, 2018 (based on IFRS 9)
15,797,097
(2) Basis of consolidated financial statement presentation
The consolidated financial statements incorporate the financial statements of the ~~Bank~~Group and ~~its subsidiaries~~the entities (including structured entities) controlled by the ~~Bank (the “Group”). The Group determines that~~Group. Control is achieved where the Group ~~controls an investee if~~1) has the ~~Group has all the following: 1)~~ power over the investee, 2) ~~exposure,~~is exposed, or has rights, to variable returns from its involvement with the investee, and 3) has the ability to use its power ~~over the investee~~ to affect ~~the amount of the investor’s~~its returns. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
When the Group has less than a majority of the voting rights of an investee, it ~~still~~ has ~~the~~ power over the investee ifwhen the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.
The Group considers all relevant facts and circumstances in assessing whether or not the Group’s voting rights in an investee are sufficient to give it power, including:

The relative size of the Group’s holding of voting rights ~~relative to the size~~ and dispersion of holdings of the other vote holders;

Potential voting rights held by the Group, other vote holders or other parties;

Rights arising from other contractual arrangements; or

Any additional facts and circumstances that indicate that the Group has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated ~~statements~~statement of comprehensive income from the ~~effective~~ date ~~of acquisition or up~~the Group gains control until the date when the Group ceases to control the ~~effective date of disposal, respectively, as appropriate.~~subsidiary. The carrying amount of thenon-controlling ~~interests~~interest after the acquisition is ~~adjusted to reflect their proportional share~~the amount initially recognized plus the amount of proportionate interest of thenon-controlling interest in the changes in equity ~~subsequent to~~since the ~~initial recognition.~~acquisition. Total comprehensive income of subsidiaries is attributed to the ~~owners~~owner of the Group and to thenon-controlling interests even if this ~~result~~results in thenon-controlling interests ~~has~~having a deficit balance.
~~When~~Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies ininto line with ~~those adopted by~~ the ~~Group.~~Group’s accounting policies.
All intra-group transactions and, related assets and liabilities, income and expenses are eliminated in full on consolidation.
Non-controlling interest of a subsidiary are separately identified from the equity of the Group.Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at thenon-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on atransaction-by-transaction basis. Other types ofnon-controlling interests are measured at fair value. The carrying amount of thenon-controlling interest after the acquisition is the amount initially recognized with the amount entitled to the proportionate interest of thenon-controlling interest when there are changes in equity since the acquisition. Total comprehensive income of subsidiaries is attributed to the owner of the Group and to thenon-controlling interests even if this results in thenon-controlling interests having a deficit balance.
Changes in the Group’s ownership interests in subsidiaries ~~without a loss of~~that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the ~~owners’~~Group’s interests and thenon-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the ~~adjusted~~amount by which thenon-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to ~~owners~~the owner of the ~~Group.~~parent company.
When the Group loses control of a subsidiary, ~~the profit~~a gain or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and anynon-controlling interests. When ~~the~~ assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognized in other comprehensive income and accumulated in equity, the amounts previously recognized in other comprehensive income and accumulated in equity are accounted for as if the Group had directly disposed of the relevant assets (i.e. reclassified to ~~net income~~profit or loss or transferred directly to retained earnings). The fair value of any investment retained in the former subsidiary at the date when control is lost is recognized as the fair value on initial recognition for subsequent accounting under ~~IAS 39~~IFRS 9 Financial ~~Instruments: Recognition and Measurement~~Instruments or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.
(3) Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured ~~at fair value, which is calculated~~ as the sum of the acquisition-date fair values of the assets transferred by the Group in exchange for control of the acquiree, liabilities assumed by the Group tofor the former owners of the acquiree and the equity interests issued by the ~~Group in exchange for control of the acquiree.~~Group. Acquisition-related costs are generally recognized in ~~net income~~profit or loss as incurred.
At the acquisition date, the acquiree’s identifiable acquires assets, liabilities and contingent liabilities that meet the condition for recognition under IFRS 3 are recognized at their fair value, except ~~that:~~for the followings:

• ~~deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12~~~~Income Taxes~~ ~~and IAS 19~~~~Employee Benefits,~~~~respectively;~~
deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits, respectively;

• liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2~~Share-based Paymentat the acquisition date; and~~
liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payment at the acquisition date; and

• ~~non-current~~ ~~assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5~~~~Non-current~~ ~~Assets Held for Sale and Discontinued Operations~~ ~~are measured at the lower of their previous carrying amounts and fair value less costs to sell~~.
non-current assets (or disposal groups) that are classified as held for sale are measured in accordance with IFRS 5‘Non-current Assets Held for Sale and Discontinued Operations’
Any excess of the sum of the consideration transferred, the amount of anynon-controlling interest in the acquiree and the fair value of the Group’s previously held equity interest (if any) in the acquiree over the net of identifiable assets and liabilities assumed of the acquiree at the acquisition date is recognized as ~~goodwill which is included in intangible assets.~~goodwill.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of anynon-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognized immediately in net income as a bargain purchase gain.
~~Non-controlling~~ interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the
~~non-controlling~~ ~~interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on atransaction-by-transaction~~ ~~basis. Other types ofnon-controlling~~ ~~interests are measured at fair value or, when applicable, on the basis specified in another IFRSs.~~
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration ~~that is classified as an asset or a liability~~other than the above is remeasured at subsequent reporting dates ~~in accordance with IAS 39~~~~Financial Instruments: Recognition and Measurement~~~~, or IAS 37~~~~Provisions, Contingent Liabilities and Contingent Assets~~, as appropriate, with the corresponding gain or loss being recognized in profit or loss.
When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured at fair value at the acquisition date (i.e., the date when the Group obtains control) and the resulting gain or loss, if any, is recognized in net ~~income.~~income(or other comprehensive income, if applicable). Amounts arising from changes in value of interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are ~~reclassified~~recognized, identical to ~~net income where such~~the treatment ~~would be appropriate if that interest were disposed of.~~assuming interests are sold directly.
In case where i) a common entity ultimately controls over all participating entities, or businesses, in a business combination transaction, prior to and after the transaction continuously, and ii) the control is not temporary, the transaction meets the definition of “business combination under common control” and it is deemed that the transaction only results in the changes in legal substance, and not economic substance, from the perspective of the ultimate controlling party. Thus, in such transactions, the acquirer recognizes the assets and liabilities of the acquiree onin its financial statements at the book values as recognized in the ultimate controlling party’s consolidated financial statements, and the difference between the book value of consideration transferred to and the book value of net assets transferred in is recognized as equity.
If the initial accounting for a business combination is not completed by the end of the reporting period in which the business combination occurred, the Group reports in consolidated financial statements the provisional amount of items that have not been accounted for. If there is new information about the facts and circumstances that existed as of the acquisition date during the measurement period (see above), the Group retrospectively adjusts the provisional amounts recognized at the acquisition date or recognizes additional assets and liabilities to reflect the information that would have affected the measurement of the amount recognized at the acquisition date if it had already known at the acquisition date.
(4) Investments in joint ventures and associates
An associate is an entity over which the Group has significant ~~influence.~~influence, and that is not a subsidiary or a joint venture. Significant influence is the power to participate in making decision on the financial and operating policy of the investee but is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to net assets relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
The net income of current period and the ~~financial results~~assets and liabilities of the joint ventures and associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in the joint ventures and associates is initially recognized in the consolidated statements of financial position at cost and adjusted thereafter to recognize the Group’s share of the net assets of the joint ventures and associates and any
impairment. When the Group’s share of losses of the joint ventures and associates exceeds the Group’s interest in the associate, ~~(including any long term interests that, in substance, form part of the entity’s net investment in the associate or joint venture),~~ the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint ventures and associates.
Investment in joint ventures and associates are accounted for and applied with the equity method from the time the investee becomes an associate or a joint venture.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the joint ventures and associates recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition exists after the review, it is recognized immediately in net income.
The requirements of IAS 28- Investments in Associates and Joint Ventures to determine whether there has been a loss event are applied to identify whether it is necessary to recognize any impairment loss with respect to the Group’s investment in the joint ventures and associates. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36- Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized is not allocated to any asset (including goodwill), which forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
The Group ceases to use the equity method from the time it fails meet the definition of an associate or a joint venture. Upon a loss of significant influence over the joint ventures and associates, the Group discontinues the use of the equity method and measures at fair value of any investment that the Group retains in the former joint ventures and associates from the date when the Group loses significant influence. The fair value of the investment is regarded as its fair value on initial recognition as a financial asset in accordance with ~~IAS 39~~IFRS 9 Financial Instruments; Recognition and Measurement. The Group recognized differences between the carrying amount and fair value in net income and it is included in determination of the gain or loss on disposal of joint ventures and associates. The Group accounts for all amounts recognized in other comprehensive income in relation to that joint ventures and associates on the same basis as would be required if the joint ventures and associates had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by an associate or a joint venture would be reclassified to net income on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to net income as a reclassification adjustment.
When the Group’s ownership of interest in an associate or a joint venture decreases but the Group continues to maintain significant influence over an associate or a joint venture, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that decrease in ownership interest if the gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. Meanwhile, if interest on associate or joint venture meets the definition ofnon-current asset held for sale, it is accounted for in accordance with IFRS 5.
~~The requirements of IAS 39~~~~Financial Instruments: Recognition and Measurement~~ to determine whether there has been a loss event are applied to identify whether it is necessary to recognize any impairment loss with respect to the Group’s investment in the joint ventures and associates. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36~~Impairment of Assets~~ as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized is not allocated to any asset (including goodwill), which forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.
When a subsidiary transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognized in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.
The Group applies IFRS 9 ‘Financial Instruments’, including the impairment requirements, to its long-term investment interests in associates and joint ventures that form part of its net investment without applying the equity method. In addition, when applying IFRS 9 to long-term investments, the Group does not consider adjustments to the carrying amount required by IAS 28. Examples of such adjustments include an impairment assessment or an adjustment to the carrying amount of the long-term investment interest resulting from the allocation of losses to the investee in accordance with IAS 28.
(5) Investment in ~~joint~~Joint operation
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
When the Group operates as a joint operator, it recognizes in relation to its interest in a joint operation:
~~(a)~~
its assets, including its share of any assets held jointly;
~~(b)~~
its liabilities, including its share of any liabilities incurred jointly;
~~(c)~~
its revenue from the sale of its share of the output arising from the joint operation;
~~(d)~~
its share of the revenue from the sale of the output by the joint operation; ~~and~~
~~(e)~~
its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs and IASs applicable to the particular assets, liabilities, revenues and expenses.
When the Group enters into a transaction with a joint operation in which it is a joint operator, such as a sale or contribution of assets, it is conducting the transaction with the other parties to the joint operation and, as such, the Group recognizes gains and losses resulting from such a transaction only to the extent of the other parties’ interests in the joint operation.
When the Group enters into a transaction with a joint operation in which it is a joint operator, such as a purchase of assets, it does not recognize ~~its~~proportional share of profit or loss until the ~~gains and losses until it resells those assets~~asset is sold to a third party.
(6) Revenue recognition
IFRS 15 requires the recognition of revenues based on transaction price allocated to the performance obligation when or as the Group performs that obligation to the customer. Since revenues other than those from contracts with customers, such as interest revenue and loan origination fee (cost), are measured through effective interest rate method.
1) Revenues from contracts with customers
The Group recognizes revenue when the Group satisfies a performance obligation by transferring a promised good or service to a customer. When a performance obligation is satisfied, the Group shall recognizes
as a revenue the amount of the transaction price that is allocated to that performance obligation. The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.
The Group is recognizing revenue by major sources as shown below:
1) Fees and commission received for brokerage
The fees and commission received for agency are the amount of consideration or fee expected to be entitled to receive in return for providing goods or services to the other parties with the Group acting as an agency, such as in the case of sales of bancassurance and beneficiary certificates. The majority of these fees and commission received for brokerage are from the business activities relevant to Banking segment.
2) Fees and commission received related to credit
The fees and commission received related to credit mainly include the lending fees received from the loan activity and the fees received in the L/C transactions. Except for the fees and commission accounted for in calculating the effective interest rate, it is generally recognized when the performance obligation has been performed. The majority of these fees and commission received related to credit are from the business activities relevant to Banking, Credit card and Investment banking segment.
3) Fees and commission received for electronic finance
The fees and commission received for electronic finance include fees received in return for providing various kinds of electronic financial services through firm-banking and CMS. These fees are recognized as revenue immediately upon the completion of services. The majority of these fees and commission received for electronic finance are from the business activities relevant to Banking and Investment banking segment.
4) Fees and commission received on foreign exchange handling
The fees and commission received on foreign exchange handling consist of various fees incurred when transferring foreign currency. The point of processing the customer’s request is the time when performance obligation is satisfied, and revenue is immediately recognized when fees and commission are received after requests are processed. The business activities relevant to these fees and commission received on foreign exchange handling are substantially attributable to Banking segment.
5) Fees and commission received on foreign exchange
The fees and commission received on foreign exchange consist of fees related to the issuance of various certificates, such as exchange, import and export performance certificates, purchase certificates, etc. The point of processing the customer’s request is the time when performance obligation is satisfied, and revenue is immediately recognized when fees and commission are received after requests are processed. The business activities relevant to these fees and commission received on foreign exchange are substantially attributable to Banking segment.
6) Fees and commission received for guarantee
The fees and commission received for guarantee include the fees received for the various warranties. The activities related to the warranty consist mainly of performance obligations satisfied over time and fees and commission are recognized over the guarantee period. The business activities relevant to these fees and commission received for guarantee are substantially attributable to Banking segment.
7) Fees and commission received on credit card
The fees and commission received on credit card consist mainly of merchant account fees and annual fees.
The Group recognizes merchant account fees by multiplying agreed commission rate to the amount paid by using the credit card. The annual fees are performance obligation satisfied over time and are recognized over agreed periods after the annual fees are paid in advance. The business activities relevant to these fees and commission received on credit card are substantially attributable to Credit cards segment.
8) Fees and commission received on securities business
The fees and commission received on securities business consist mainly of fees and commission for the sale of beneficiary certificates, and these fees are recognized when the beneficiary certificates are sold to customers. The business activities relevant to these fees and commission received on securities business are substantially attributable to Banking and Investment banking segment.
9) Fees and commission from trust management
The fees and commission from trust management consist of fees and commission received in return for the operation and management services for entrusted assets. These operation and management services are performance obligations satisfied over time, and revenue is recognized over the service period. Among the fees and commission from trust management, variable considerations such as profit commission that are affected by the value of entrusted assets and base return of the future periods are recognized as revenue when limitations to the estimates are lifted. The majority of these fees and commission received for brokerage are from the business activities relevant to Banking segment.
10) Fees and commission received on credit Information
The fees and commission received on credit Information are composed of the fees and commission received by performing credit investigation and proxy collection services. Credit investigation fees and commission are the amount received in return for verifying the information requested by the customer and are recognized as revenue at the time the verification is completed. Proxy collection service fees are recognized by multiplying the applicable rate to the collected amount at the time when collection services are completed. The majority of these fees and commission received for brokerage are from the business activities relevant to other segment.
11) Other fees
Other fees are usually fees related to remittances, but include fees related to various other services provided to customers by the Group. These fees are recognized when transactions occur at the customers’ request and services are provided, at the same time when commission are received. These other fees occur across all operating segments.
2) Revenues from sources other than contracts with customers
1) Interest income
~~Interest income is recognized when earned.~~ Interest income on financial assets ~~that are classified as loans~~measured at FVTOCI and ~~receivables,available-for-sale~~ or~~held-to-maturity~~financial assets at amortized costs is ~~determined~~measured using the effective interest method.
The effective interest method is a method of calculating the amortized cost of a ~~financial asset (or group of financial assets)~~debt instrument and of allocating the interest income over the expected life of the asset. The effective interest rate is the rate that exactly discounts estimated future cash flows to the instrument’s initial ~~carrying amount. Calculation~~unamortized cost over the expected period, or shorter if appropriate. Future cash flows include commissions and cost of reward points(limited to the primary component of effective interest rate) and other premiums or discounts that are paid or received between the contractual parties when calculating the effective interest rate, ~~takes into account fees payable or receivable that is an integral part of the instrument’s yield, premiums or discounts on acquisition or issue, early redemption fees and transaction costs.~~but does not include expected credit losses. All contractual terms of a financial instrument are considered when estimating future cash flows.
For purchased or originated credit-impaired financial assets, interest revenue is recognized by applying the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition. Even if the financial asset is no longer impaired in the subsequent periods due to credit improvement, the basis of interest revenue calculation is not changed from amortized cost to unamortized cost of the financial assets.
2) Loan origination fees and costs
The commission fees earned on loans, which is part of the effective interest ~~rate~~ of loans, is accounted for as deferred origination fees. Incremental ~~cost~~costs related to the ~~acquisition or disposal is~~origination of loans are accounted for as deferred origination ~~costs,~~fees and it is ~~amortized~~being added or deducted to/from interest income on ~~the effective interest method and included in interest revenues on loans.~~
~~3) Fees and commissions income~~
Commitment and utilization fees are determined as a percentage of the outstanding facility. If it is unlikely that a specific lending arrangement will be entered into, such fees are taken to net income over the life of the facility, otherwise, they are deferred and included in theloans using effective interest rate ~~on the advance.~~
Fees in respect of services are recognized as the right to consideration accrues through the provision of the service to the customer. The arrangements are generally contractual and the cost of providing the service is incurred as the service is rendered. The price is usually fixed and determinable.
Credit card fees include commission received from merchants for processing credit card transaction and annual fees received from credit card holders. Revenue from the commission is accrued to net income when the service is performed and annual fee is deferred and recognized as income over the period of the service provided.
~~4) Trust fees and compensation related to trust accounts~~
The Group receives fees for its management of unconsolidated trust assets, which are recognized on an accrual basis when the management services are provided and earned. The Group also is entitled to receive performance-based fees for certain trust accounts. These performance-based fees are recognized at the end of the performance period. In addition, a certain trust account which the Group guarantees to repay the principals and minimum interests of the trust account to its beneficiaries shall be included in the consolidated financial statements. The Group recognizes incomes when earned and expenses when interests to be paid to beneficiaries are accrued.method.
(7) Accounting for foreign currencies
The Group’s consolidated financial statements are presented in Korean Won, which is the functional currency of the ~~Bank.~~Group. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at its prevailing exchange rates at the date. ~~Foreign~~The effective portion of the changes in fair value of a derivative that qualifies as a cash flow hedge and the foreign exchange differences on monetary items ~~that qualify as hedging instruments in a cash flow hedge or~~ that form part of net investment in foreign operations are recognized in equity.
~~A monetaryavailable-for-sale~~ ~~(“AFS”) financial asset is treated as if it were carried at amortized cost in~~Assets and liabilities of the foreign ~~currency. Accordingly, for such financial assets, exchange differences resulting from retranslating amortized cost are recognized in net income.~~
~~Non-monetary~~ items denominated in foreign currencies that are stated at fair value are translated into Korean Won at foreign exchange rates at the dates the values were determined. Translation differences arising on~~non-monetary~~ ~~items measured at fair value are recognized in net income except for differences arising onnon-monetary~~ ~~AFS financial assets, for example equity shares, which are included in the AFS reserve in equity unless the asset is the hedged item in a fair value hedge.~~
The Group identifies the most appropriate functional currency for each foreign operation based on the foreign operation’s activities. If Korean Won is not the foreign operation’s functional currency, its assets and liabilities, including goodwill and fair value adjustments arising on acquisition,operations subject to consolidation are translated into Korean Won at foreign exchange rates at the end of ~~each~~the reporting period. Except for situations in which it is required to use exchange rates at the date ~~while~~of transaction due to significant changes in exchange rates during the ~~revenues and expenses are translated into Korean Won at~~period, items that belong to profit or loss shall be measured by average exchange ~~rates for~~rate, with foreign exchange differences recognized as other comprehensive income and added to equity (allocated tonon-controlling interests, if appropriate). When foreign operations are disposed, the ~~period unless these do~~controlling interest’s share of accumulated foreign exchange differences related to such foreign operations will be reclassified to profit or loss, whilenon-controlling interest’s corresponding share will not ~~approximate~~be reclassified.
Adjustments to fair value of identifiable assets and liabilities, and goodwill arising from the acquisition of foreign operations will be treated as assets and liabilities of the corresponding foreign operation, and is translated using foreign exchange rates at the ~~dates~~end of the ~~transactions. Foreign~~period. The foreign exchange differences ~~arising on the translation of a foreign operation~~ are recognized ~~directly~~ in ~~equity and included in net income on its disposal.~~other comprehensive income.
(8) Cash and cash equivalents
~~Cash and cash equivalents consist of~~The Group is classifying cash on hand, demand deposits, interest-earning deposits with original maturities of up to ~~90 days of~~three months on acquisition date, and highly liquid ~~investment assets~~investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in ~~value.~~value as cash and cash equivalents.
(9) Financial assets and financial liabilities
The Group’s accounting policies in accordance with IFRS 9 for the years ended December 31, 2018 and 2019 are as follows:
1) Financial assets
A regular way purchase or sale of financial assets is recognized or derecognized on the trade or settlement date. A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose term requires delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.
On initial recognition, financial assets are classified into financial assets at FVTPL, financial assets at FVTOCI, and financial assets at amortized cost according to its business model and contractual cash flows.
a) Business model
The Group evaluates the way business is being managed, and the purpose of the business model for managing a financial asset best reflects the way information is provided to the management at its portfolio level. Such information considers the following:
The accounting policies and purpose specified for the portfolio, the actual operation of such policies. This includes strategy of the management focusing on the receipt of contractual interest revenue, maintaining a certain level of interest income, matching the duration of financial assets and the duration of corresponding liabilities to obtain the asset, and outflow or realization of expected cash flows from disposal of assets
The way the performance of a financial asset held under the business model is evaluated, and the way such evaluation is being reported to the management
The risk affecting the performance of the business model (and financial assets held under the business model), and the way such risk is being managed
The compensation plan for the management (e.g. whether the management is being compensated based on the fair value of assets or based on contractual cash flows received)
Frequency, amount, timing and reason for sale of financial assets in the past, and forecast of future sale activities.
b) Contractual cash flows
The principal is defined to be the fair value of a financial assets at initial recognition. Interest is not only composed of consideration for the time value of money, consideration for the credit risk related to remaining principal at a certain period of time, and consideration for other cost (e.g. liquidity risk and cost of operation) and fundamental risk associated with lending, but also profit.
When evaluating whether contractual cash flows are solely payments of principal and interests, the Group considers the contractual terms of the financial instrument. When a financial asset contains contractual conditions that modify the timing and amount of contractual cash flows, it is required to determine whether contractual cash flows that arise during the remaining life of the financial instrument due to such contractual condition are solely payments of principal and interest. The Group considers the following elements when evaluating the above:
Conditions that lead to modification of timing or amount of cash flows
Contractual terms that adjust contractual nominal interest, including floating rate features
Early payment features and maturity extension features
Contractual terms that limit the Group’s claim on cash flows arising from certain assets (e.g.non-recourse feature)
1) Financial assets at FVTPL
The Group is classifying those financial assets that are not classified as either financial assets at amortized cost or financial assets at FVTOCI, and those designated to be measured at FVTPL, as financial assets at FVTPL. Financial assets at FVTPL are measured at fair value, and related profit or loss is recognized in net income. Transaction costs related to acquisition at initial recognition is recognized in net income immediately upon its occurrence.
It is possible to designate a financial asset as financial asset at FVTPL if at initial recognition: (a) it is possible to remove or significantly reduce recognition or measurement mismatch that may otherwise have occurred if not for its designation as financial asset at FVTPL; (b) the financial asset forms part of the Group’s
financial instrument group (a group composed of a combination of financial asset or liability), is measured at fair value and is being evaluated for its performance, and such information is provided internally; and (c) the financial asset is part of a contract that contains one or more of embedded derivatives, and is a hybrid contract in which designation as financial asset at FVTPL is allowed under IFRS 9 ‘Financial Instruments’. However, the designation is irrevocable.
2 Financial assets at FVTOCI
When financial assets are held under a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and when contractual cash flows from such financial assets are solely payments of principal and interest, the financial assets are classified as financial assets at FVTOCI. Also, for investments in equity instruments that are not held for short-term trade, an irrevocable election is available at initial recognition to present subsequent changes in fair value as other comprehensive income.
At initial recognition, financial assets at FVTOCI is measured at its fair value plus any direct transaction cost, and is subsequently measured in fair value. However, for equity instruments that do not have a quotation in an active market and in which fair value cannot be measured reliably, they are measured at cost. The income tax effects related to the changes in fair value except for profit or loss items such as impairment losses (reversals), interest revenue calculated by using effective interest method, and foreign exchange gain or loss about debt instrument are recognized as other comprehensive income until the asset’s disposal. Upon derecognition, the accumulated other comprehensive income is reclassified from equity to net income for FVTOCI (debt instrument), and reclassified within the equity for FVTOCI (equity instruments).
3 Financial assets at amortized cost
When financial assets are held under a business model whose objective is to hold financial assets in order to collect contractual cash flows, and when contractual cash flows from such financial assets are solely payments of principal and interest, the financial assets are classified as financial assets at amortized cost. At initial recognition, financial assets at amortized cost are recognized at fair value plus any direct transaction cost. Financial assets at amortized cost is presented at amortized cost using effective interest method, less any loss allowance.
2) Financial liabilities
At initial recognition, financial liabilities are classified into either financial liabilities at FVTPL or financial liabilities at amortized cost.
Financial liabilities are usually classified as financial liabilities at FVTPL when they are acquired with a purpose to repurchase them within a short period of time, when they are part of a certain financial instrument portfolio that is actually and recently being managed with a purpose of short-term profit and joint management by the Group at initial recognition, and when they are derivatives that do not qualify as hedging instruments. Financial liabilities at FVTPL are measured at fair value plus direct transaction cost at initial recognition, and are subsequently measured at fair value. Profit or loss arising from financial liabilities at FVTPL is recognized in net income when occurred.
It is possible to designate a financial liability as financial liability at FVTPL if at initial recognition: (a) it is possible to remove or significantly reduce recognition or measurement mismatch that may otherwise have occurred if not for its designation as financial liability at FVTPL; (b) the financial asset forms part of the Group’s financial instrument group (a group composed of a combination of financial asset or liability) according to the Group’s documented risk management or investment strategy, is measured at fair value and is being evaluated for its performance, and such information is provided internally; and (c) the financial liability is part of a contract that contains one or more of embedded derivatives, and is a hybrid contract in which designation as financial liability at FVTPL is allowed under IFRS 9 ‘Financial Instruments’.
Financial liabilities designated as at FVTPL are initially recognized at fair value, with any direct transaction cost recognized in profit or loss, and are subsequently measured at fair value. Any profit or loss from financial liabilities at FVTPL are recognized in profit or loss.
Financial liabilities not classified as financial liabilities at FVTPL are measured at amortized cost. The Group is classifying liabilities such as deposits due to customers, borrowings and debentures as financial liabilities at amortized cost.
3) Reclassification
Financial assets are not reclassified after initial recognition unless the Group modifies the business model used to manage financial assets. When the Group modifies the business model used to manage financial assets, all affected financial assets are reclassified on the first day of the first reporting period after the modification.
4) Derecognition
Financial assets are derecognized when contractual rights to cash flows from the financial assets are expired, or when substantially all of risk and reward for holding financial assets is transferred to another entity as a result of a sale of financial assets. If the Group does not have and does not transfer substantially all of the risk and reward of holding financial assets with control of the transferred financial assets retained, the Group recognizes financial assets to the extent of its continuing involvement. If the Group holds substantially all the risk and reward of holding a financial asset, it continues to recognize that asset and proceeds are accounted for as collateralized borrowings.
When a financial asset is fully derecognized, the difference between the book value and the sum of proceeds and accumulated other comprehensive income is recognized as profit or loss in case of FVTOCI (debt instruments), and as retained earnings for FVTOCI (equity instruments).
In case when a financial asset is not fully derecognized, the Group allocates the book value into amounts retained in the books and removed from the books, based on the relative fair value of each portion at the date of sale, and based on the degree of continuing involvement. For the derecognized portion of the financial assets, the difference between its book value and the sum of proceeds and the portion of accumulated other comprehensive income attributable to that portion will be recognized in profit or loss in case of debt instruments and recognized in retained earnings in case of equity instruments. The accumulated other comprehensive income is distributed to the portion of book value retained in the books, and to the portion of book value removed from the books.
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability
5) Fair value of financial instruments
Financial assets at FVTPL and financial assets at FVTOCI are measured and presented in consolidated financial statements at their fair values, and all derivatives are also subject to fair value measurement.
Fair value is defined as the price that would be received to exchange an asset or paid to transfer a liability in a recent transaction between independent parties that are reasonable and willing. Fair value is the transaction price of identical financial assets or financial liabilities generated in an active market. An active market is a market where trade volume is sufficient and objective price information is available due to the fact that bid and ask price differences are small.
When trade volume of a financial instrument is low, when transaction prices within the market show large differences among them, or when it cannot be concluded that a financial instrument is being traded within an active market due to disclosures being extremely shallow, fair value is measured using valuation techniques based on alternative market information or using internal valuation techniques based on general and observable information obtained from objective sources. Market information includes maturity and characteristics, duration, similar yield curve, and variability measurement of financial instruments of similar nature. Fair value amount contains unique assumptions on each entity (the Group concluded that it is using assumptions applied in valuing financial instruments in the market, or risk-adjusted assumptions in case marketability does not exist).
The market approach and income approach, which are valuation techniques used to estimate the fair value of financial instruments, both require significant judgment. Market approach measures fair value using either a recent transaction price that includes the financial instrument, or observable information on comparable firm or assets. Income approach measures fair value through discounting future cash flows with a discount rate reflecting market expectations, and revenue, operating income, depreciation, capital expenditures, income tax, working capital and estimated residual value of financial investments are being considered when deriving future cash flows. Valuation techniques such as the above include estimates based on the financial instruments’ complexity and usefulness of observable information in the market.
The valuation techniques used in the evaluation of financial instruments are explained below.
a) Financial assets at FVTPL and Financial assets at FVTOCI
The fair value of equity securities included in financial assets at FVTPL and financial assets at FVTOCI category is recognized in the statement of financial position at its available market price. Debt securities traded in theover-the-counter market are generally recognized at an amount computed by an independent appraiser. When the Group uses the fair value determined by independent appraisers, the Group usually obtains three values from three different appraisers for each financial instrument, and selects the minimum amount without making additional adjustments. For equity securities without marketability, the Group uses the amount determined by the independent appraiser. The Group verifies the prices obtained from appraisers in various ways, including the evaluation of independent appraisers’ competency, indirect verification through comparison between appraisers’ price and other available market information, and reperformed by employees who have knowledge of valuation models and assumptions that appraisers used.
b) Derivatives
The Group’s transactions involving derivatives such as futures and exchange traded options are measured at market value. For exchange traded derivatives classified as level 2 in the fair value hierarchy, the fair value is estimated using internal valuation techniques. If there are no publicly available market prices because they are tradedover-the-counter, fair value is measured through internal valuation techniques. When using internal valuation techniques to derive fair value, the types of derivatives, base interest rate or characteristics of prices, or stock market indices are considered. When variables used in the internal valuation techniques are not observable information in the market, such variables may contain significant estimates.
c) Adjustment of valuation amount
The Group is exposed to credit risk when a counterparty to a derivative contract does not perform its contractual obligation, and the exposure amount is equal to the amount of derivative asset recognized in the
statement of financial position. When the Group earns income through valuation of derivatives, such income is recognized as derivative asset in the statement of financial position. Some of the derivatives are traded in the market, but most of the derivatives are measured at estimated fair value derived from internal valuation models that use observable information in the market. As such, in order to estimate the fair value there should be an adjustment made to incorporate counterparty’s credit risk, and credit risk adjustment is being considered when valuing derivative assets such asover-the counter derivatives. The amount of financial liabilities is also adjusted by the Group’s own credit risk when valuing them.
The amount of adjustment is derived from counterparty’s probability of default and loss given default. This adjustment considers contractual matters that are designed to reduce the Group’s exposure to each counterparty’s credit risk. When derivatives are under master netting arrangement, the exposure used in the computation of credit risk adjustment is a net amount after adding/deducting cash collateral received (or paid) from loss(or gain) position derivatives with the same counterparty.
6) Expected credit losses on financial assets
The Group recognizes loss allowance on expected credit losses for the following assets:
Financial assets at amortized cost
Debt instruments measured at FVTOCI
Contract assets as defined by IFRS 15
Expected credit losses are weighted-average value of a range of possible results, considering the time value of money, and are measured by incorporating information on current conditions and forecasts of future economic conditions that are available without undue cost or effort.
The methods to measure expected credit losses are classified into following three categories in accordance with IFRS:
General approach: Financial assets that does not belong to below two models and unused loan commitments
Simplified approach: When financial assets are either trade receivables, contract assets or lease receivables
Credit impairment model: Purchased or originated credit-impaired financial assets
The measurement of loss allowance under general approach is differentiated depending on whether the credit risk has increased significantly after initial recognition. That is, loss allowance is measured based on12-month expected credit loss when the credit risk has not increased significantly after initial recognition, while loss allowance is measured at lifetime expected credit loss when credit risk has increased significantly. Lifetime is the expected remaining life of the financial instrument up to the maturity date of the contract.
The measurement of loss allowance under simplified approach is always based on lifetime expected credit loss, and loss allowance under credit impairment model is measured as the cumulative change in lifetime expected credit loss since initial recognition.
a) Measurement of expected credit losses on financial asset at amortized cost
The expected credit losses on financial assets at amortized cost is measured by the difference between the contractual cash flows during the period and the present value of expected cash flows. Expected cash inflows are computed for individually significant financial assets in order to calculate expected credit losses.
When financial assets that are not individually significant, they are included in a group of financial assets with similar credit risk characteristics and expected credit losses of the group are calculated collectively.
Expected credit losses are deducted through loss allowance account, and when the financial asset is determined to be uncollectible, the loss allowance is written off from the books along with the related financial asset. When loan receivable previously written off is subsequently collected, the related loss allowance is increased and changes in loss allowance are recognized in profit or loss.
b) Measurement of expected credit losses on financial asset at FVTOCI
The measurement method of expected credit loss is identical to financial asset at amortized cost, but changes in the loss allowance is recognized in other comprehensive income. When financial assets at FVTOCI is disposed or repaid, the related loss allowance is reclassified from other comprehensive income to net income.
The comparative financial statements for the year ended December 31, 2017 are prepared in accordance with IAS 39 as follows:
1) Financial assets
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose term requires delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.
On initial recognition, financial assets are classified intoheld-for-trading, designated as at fair value through profit or loss (“FVTPL”), ~~AFS~~Available-for-sale (“AFS”) financial assets,held-to-maturity (“HTM”) investments and loans and receivables. ~~Regular way purchases~~
a) Financial assets at FVTPL
The Group classifies financial assets as financial assets measured at FVTPL when they are either held for trading or designated to be measured at FVTPL. Financial assets acquired with the purpose of selling in the near term are classified as financial assets held for trading, and are measured at fair value with related valuation gain or loss recognized in net income. Any transaction cost related to the acquisition of financial assets ~~classified as loans and receivables are~~at initial recognition is recognized ~~on settlement date; all other regular way transactions~~ in ~~financial assets are recognized on trade date.~~
a)~~Held-for-trading:~~net income upon its occurrence.
A financial asset ~~is classified asheld-for-trading~~ ~~if it is acquired principally~~other than a financial asset held for sale in the near term, or forms part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking, or it is a derivative (not in a qualifying hedge relationship).~~Held-for-trading~~ ~~financial assets are recognized at fair value with transaction costs being recognized in net income. Subsequently they are measured at fair value. Gains and losses onheld-for-trading~~ ~~financial assets are recognized in net income as they arise.~~
~~b) Designated as at FVTPL:~~
~~Financial assets~~trading may be designated as at FVTPL ~~only if~~upon initial recognition if: (a) such designation ~~(a)~~ eliminates or significantly reduces a measurement or recognition ~~inconsistency;~~inconsistency that would otherwise arise; or (b) ~~applies to~~the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or (c) ~~is related to~~it forms part of a contract containing one or more embedded ~~derivative that would be required~~derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be ~~separated from the host contract.~~designated as at FVTPL.
Financial assets designated by the Group on initial recognition as at FVTPL are recognized at fair value, with transaction costs recognized in net income, and are subsequently measured at fair value. Gains and losses on financial assets that are designated as at FVTPL are recognized in net income as they arise.
c)b) AFS financial ~~assets:~~assets
Financial assets that are not classified as ~~HTM;held-for-trading;~~ ~~designated as~~HTM, financial assets at ~~FVTPL;~~FVTPL, or loans and receivables, are classified as AFS. Financial assets can be designated as AFS on initial recognition. AFS financial assets are initially recognized at fair value plus directly related transaction costs. They are subsequently measured at fair
value. Unquoted equity investments whose fair value cannot be measured reliably are carried at cost and classified as AFS financial assets. Impairment losses in monetary andnon-monetary AFS financial assets and dividends onnon-monetary financial assets are recognized in net income. Interest revenue on monetary financial assets is calculated using the effective interest ~~method and recognized as a net income. Changes~~method. Other changes in the fair value of AFS financial assets ~~other than those resulting from retranslation of monetary AFS at the reporting date,~~ and any related tax are reported in a separate component of shareholders’ equity until disposal, ~~and then~~when the cumulative gain or loss is recognized in net income.
d)c) HTM ~~investments:~~financial assets
A financial asset may be classified as a HTM investment only if it has fixed or determinable payments, a fixed maturity, and the Group has the positive intention and ability to hold the financial asset to maturity. HTM investments are initially recognized at fair value plus directly related transaction costs. They are subsequently measured at amortized cost using the effective interest method less any impairment losses.
e)d) Loans and ~~receivables:~~receivables
Non-derivative financial assets with fixed or determinable repayments that are not quoted in an active market are classified as loans and receivables, except those that are classified as AFS or asheld-for-trading, or designated as at FVTPL. Loans and receivables are initially recognized at fair value plus directly related transaction costs. They are subsequently measured at amortized cost using the effective interest method less any impairment losses. Interest income is recognized using the effective interest method, except for the short-term receivables to which the present value discount is not meaningful.
2) Financial liabilities
On initial recognition financial liabilities are classified ~~intoheld-for-trading;~~financial liabilities at FVTPL (held for trading, and financial liabilities designated as at ~~FVTPL; or amortized cost. Issues of equity or~~FVTPL) and financial liabilities measured at amortized ~~cost are recognized on settlement date; all other regular way transactions in financial instruments are recognized on trade date.~~
a)~~Held-for-trading:~~cost.
A financial liability is classified asheld-for-trading if it is incurred principally for repurchase in the near term, or forms part of a portfolio of financial instruments that are managed together and for which there is an evidence of short-term profit taking, or it is a derivative (not in a qualifying hedge relationship).Held-for-trading financial liabilities are recognized at fair value with transaction costs being recognized in net income. Subsequently, they are measured at fair value. Gains and losses are recognized in net income as they arise.
~~b) Designated as at FVTPL:~~
~~Financial liabilities~~A financial liability other than a financial liability held for trading may be designated as at FVTPL ~~only if~~upon initial recognition if: (a) such designation ~~(a)~~ eliminates or significantly reduces a measurement or recognition ~~inconsistency;~~inconsistency that would otherwise arise; or (b) ~~applies to~~the financial liability forms part of a group of financial assets or financial liabilities or both, ~~that the Group manages~~which is managed and ~~evaluates~~its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or (c) ~~relates~~it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to ~~an instrument that contains an embedded derivative which is not evidently closely related to the host contract.~~ be designated as at FVTPL.
Financial liabilities that the Group designates on initial recognition as being at FVTPL are recognized at fair value, with transaction costs being recognized in net income, and are subsequently measured at fair value. Gains and losses on financial liabilities that are designated as at FVTPL are recognized in net income as they ~~arise.~~
~~c) Amortized cost:~~incur.
All other financial liabilities, such as deposits due to customers, borrowings, and debentures, are measured at amortized cost using the effective interest method.
3) Reclassifications
Held-for-trading and AFS financial assets that meet the definition of loans and receivables(non-derivative financial assets with fixed or determinable payments that are not quoted in an active market) may be reclassified to loans and receivables if the Group has the intention and ability to hold the financial asset for the foreseeable future or until maturity. The Group typically regards the foreseeable future as twelve months from the date of reclassification. Reclassifications are made at fair value. This fair value becomes the asset’s new cost or amortized cost as appropriate. Gains and losses recognized up to the date of reclassification are not reversed.
4) Derecognition of financial assets and liabilities
The Group derecognizes a financial asset when the contractual right to the cash flows from the asset is expired, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another company. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulated gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.
On derecognition of a financial assets other than in its entirety, ~~(e.g. when the Group retains an option to repurchase part of a transferred asset, or it retains a residual interest and such an retained interest indicates that~~
~~the transferor has neither transferred nor retained substantially all the risks and rewards of ownership and has retained control of the transferred asset),~~ the Group allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair value of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part that is no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair value of those parts.
The Group derecognizes the financial liability, when Group’s obligations are discharged, ~~cancelled~~canceled or expired. The difference between paid cost and the carrying amount of financial liabilities is recorded in profit or loss.
5) Fair value of financial assets and liabilities
Financial instruments classified asheld-for-trading or designated as at FVTPL and financial assets classified as AFS are recognized in the financial statements at fair value. All derivatives are measured at fair value.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in and orderly transaction between market participants at the measurement date. Fair values are determined from quoted prices in active markets for identical financial assets or financial liabilities where these are available. The Group characterizes active markets as those in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
Where a financial instrument is not in active market characterized by low transaction volumes, price quotations which vary substantially among market participants, or in which minimal information is released publicly, fair values are established using valuation techniques ~~relying~~rely on alternative market data or internally developed models using significant inputs that are generally readily observable from objective sources. Market data includes prices of financial instruments with similar maturities and characteristics, duration, interest rate
yield curves, and measures of volatility. The amount determined to be fair value may incorporate the management of the Group’s own assumptions (including assumptions that the Group believes market participants would use in valuing the financial instruments and assumptions relating to appropriate risk adjustments for nonperformance and lack of marketability).
The valuation techniques used to estimate the fair value of the financial instruments include market approach and income approach, each of which involves a significant degree of judgment. Under the market approach, fair value is determined by reference to a recent transaction involving the financial instruments or by reference to observable valuation measures for comparable companies or assets.
Under the income approach, fair value is determined by converting future amounts (e.g., cash flows or earnings) to a single present amount (discounted) using current market expectations about the future amounts. In determining value under this approach, the Group makes assumptions regarding, among other things, revenues, operating income, depreciation and amortization, capital expenditures, income taxes, working capital needs, and terminal value of the financial investments. These valuation techniques involve a degree of estimation, the extent of which depends on the instrument’s complexity and the availability of market-based data.
The following are descriptions of valuation methodologies used by the Group to measure various financial instruments at fair value.
a) Financial assets at FVTPL and AFS financial ~~assets:~~assets
The fair value of the securities included in financial assets at FVTPL and AFS financial assets are recognized in the consolidated statements of financial position based on ~~available~~ quoted market ~~prices.~~prices, where available. For debt
securities traded in the OTC market, the Group generally determines fair value based on prices obtained from independent pricing services. Specifically, with respect to independent pricing services, the Group obtains three prices per instrument from reputable independent pricing services in Korea, and generally uses the lowest of the prices obtained from such services without further adjustment. Fornon-marketable equity securities, the Group obtains prices from the independent pricing services. The Group validates prices received from such independent pricing services using a variety of means, including verification of the qualification of the independent pricing services, corroboration of the pricing by comparing the prices among the independent pricing services and by reference to other available market data, and review of the pricing model and assumptions used by the independent pricing services by the Group’s personnel who are familiar with market-related conditions.
b) ~~Derivative assets and liabilities:~~Derivatives
Quoted market prices are used for the Group’s exchange-traded derivatives, such as certain interest rate futures and option contracts. All of the Group’s derivatives ~~that~~ are traded in OTC markets where quoted market prices are not readily available are valued using internal valuation techniques. Valuation techniques and inputs to internally developed models depend on the type of derivative and nature of the underlying rate, price or index upon which the derivative’s value is based. If the model inputs for certain derivatives are not observable in a liquid market, significant judgments on the level of inputs used for valuation techniques are required.
c) ~~Valuation Adjustments:~~Adjustment of valuation amount
By using derivatives, the Group is exposed to credit risk if counterparties to the derivative contracts do not perform as expected. If counterparty fails to perform, counterparty credit risk is equal to the amount reported as a derivative asset in the consolidated statements of financial position. The amounts reported as a derivative asset are derivative contracts in a gain position. Few of the Group’s derivatives are listed on an exchange. The majority of derivative positions ~~are~~is valued using internally developed models that use as their basis observable market inputs. Therefore, an adjustment is necessary to reflect the credit quality of each counterparty to arrive at fair value. Counterparty credit risk adjustments are applied to derivative assets, such as OTC derivative instruments,
when the market inputs used in valuation models may not be indicative of the creditworthiness of the counterparty. Adjustments are also made when valuing financial liabilities to reflect the Group’s own credit standing.
The adjustment is based on probability of default of a counterparty and loss given default. The adjustment also takes into account contractual factors designed to reduce the Group’s credit exposure to each counterparty. To the extent derivative assets (liabilities) are subject to master netting arrangements, the exposure used to calculate the credit risk adjustment is net of derivatives in a loss (gain) position with the same counterparty and cash collateral received (paid).
6) Impairment of the financial assets
The Group assesses at the end of each reporting date whether there is any objective evidence that a financial asset or group of financial assets classified as AFS, HTM or loans and receivables is impaired. A financial asset or portfolio of financial assets is impaired and an impairment loss ~~incurs~~incurred if there is an objective evidence of impairment as result of one or more events that occurred after the initial recognition ~~of an~~ asset and that event (or events) has an impact on the estimated future cash flows of the financial asset.
a) Financial assets carried at amortized ~~cost:~~cost
If there is an objective evidence that an impairment loss on a financial asset or group of financial assets classified as HTM investments or as loans and receivables ~~has~~have been incurred, the Group measures the amount of the loss as the difference between the carrying amount of the asset or group of assets and the present value of estimated future cash flows from the asset or group of assets discounted at the effective interest rate of the instrument at initial recognition. For collateralized loans and receivables, estimated future cash flows include cash flows that may result from foreclosure less the costs of obtaining and selling the collateral.
Impairment losses are assessed individually for financial assets that are individually significant and assessed either individually or collectively for assets that are not individually significant. In making collective assessment of impairment, financial assets are grouped into portfolios on the basis of similar risk characteristics. Future cash flows from these portfolios are estimated on the basis of the contractual cash flows and historical loss experience for assets with similar credit risk characteristics. Historical loss experience is adjusted, on the basis of observable data, to reflect current conditions not affecting the period of historical experience.
Impairment losses are recognized in net income and the carrying amount of the financial asset or group of financial assets is reduced by establishing a provision for impairment losses. If, in a subsequent period, the amount of the impairment loss reduces and the reduction can be ascribed to an event after the impairment was recognized (i.e., improvement in the credit quality of a debtor), the previously recognized loss is reversed by adjusting the provision. Once an impairment loss has been recognized on a financial asset or group of financial assets, interest income is recognized on the carrying amount using the rate of interest at which estimated future cash flows were discounted in measuring impairment.
It is not the Group’s usual practice towrite-off the asset at the time an impairment loss is recognized. Impaired loans and receivables are written off (i.e. the impairment provision is applied in writing down the loan’s carrying value in full) when the Group concludes that there is no longer any realistic prospect of recovery of part or the entire loan. Amounts recovered after a loan has been written off are reflected to the provision for the period in which they are received.
b) Financial assets carried at fair ~~value:~~value
When a decline in the fair value of a financial asset classified as AFS has been recognized directly in other comprehensive income and there is an objective evidence that the asset is impaired, the cumulative loss is removed
from other comprehensive income and recognized in net income. The loss is measured as the difference between the amortized cost of the financial asset and its current fair value. Impairment losses on AFS equity instruments are not reversed through net income, but those on AFS debt instruments are reversed, if there is a decrease in the cumulative impairment loss that is objectively related to a subsequent event.
(10) Offsetting financial instruments
Financial assets and liabilities are presented inas a net amount in the ~~consolidated~~ statements of financial position when the Group has an enforceable legal right ~~to set off~~ and an intention to settle on a net basis or to realize an asset and settle the liability simultaneously.
(11) Investment properties
The Group classifies a property held to earn rentals and/or for capital appreciation as an investment property. Investment properties are measured initially at cost, including transaction costs, less subsequent depreciation and impairment.
Subsequent costs are included in the carrying amount of the asset or recognized as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured ~~reliably.~~reliably, and the book value of a portion of an asset that are replaced by a subsequent expenditure is removed from the books. Routine maintenance and repairs are expensed as incurred.
While land is not depreciated, all other investment properties are depreciated based on the ~~respective assets’ estimated~~depreciation method and useful lives ~~using the straight-line method.~~of premises and equipment. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, ~~with~~and when it is deemed appropriate to change them, the effect of any change ~~in estimate~~is accounted for onas a ~~prospective basis.~~change in accounting estimates.
An investment property is derecognized from the consolidated financial statements on disposal or when it is permanently withdrawn from use and no future economic benefits are expected even from its disposal. The gain
or loss on the derecognition of an investment property is calculated as the difference between the net disposal proceeds and the carrying amount of the property and is recognized in profit or loss in the period of the derecognition.
(12) Premises and equipment
Premises and equipment are stated at cost less ~~subsequent~~ accumulated depreciation and accumulated impairment losses. The cost of an item of premises and equipment is expenditure directly attributable to their purchase or construction, which includes any ~~costs~~cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. It also includes the initial estimate of ~~the~~ costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs ~~to replace part of the premises and equipment~~ are recognized in the carrying amount of an asset or as ana separate asset (if appropriate) if it is probable that ~~the~~ future economic ~~benefits~~benefit associated with the assets will flow into the Group and the cost of an asset can be measured reliably. Routine maintenance and repairs are expensed as incurred.
While land is not depreciated, for all other premises and equipment, depreciation is charged to net income on a straight-line basis onby applying the following estimated economic useful lives ~~as follows:~~on the amount of cost or revalued amount less residual value.


Useful life
Buildings used for business purpose
   35 to 57 years
Structures in leased office
   4 to 5 years
Properties for business purpose
   4 to 5 years
~~Leased~~Right-of-use assets

Useful lives of the same kind or
similar other premises and equipment
The Group reassesses the depreciation method, the estimated useful lives and residual values of premises and equipment at the end of each reporting period. If ~~expectations differ from previous~~changes in the estimates are deemed appropriate, the changes are accounted for as a change in an accounting estimate. When there is an indicator of impairment and the carrying amount of a ~~fixed asset~~premises and equipment item exceeds the estimated recoverable amount, the carrying amount of such asset is reduced to the recoverable amount.
(13) Intangible assets and goodwill
~~Intangible~~The Group is recognizing intangible assets ~~are stated~~measured at the manufacturing cost or acquisition cost plus additional incidental expenses less accumulated amortization and accumulated impairment losses. The Group’s intangible ~~assets~~asset are amortized ~~on a~~over the following economic lives using the straight-line ~~basis on the estimated economic useful lives as follows.~~method. The estimated useful life and amortization method are reviewed at the end of each reporting period. If ~~expectations differ from previous~~changes in the estimates are deemed appropriate, the changes are accounted for as a change in an accounting estimate.


Useful life
~~Patents~~Industrial property rights
   10 years
Development costs
   5 years
Software and others
   4 to 510 years
In addition, when an indicator that intangible assets are impaired is noted, and the carrying amount of the asset exceeds the estimated recoverable amount of the asset, the carrying amount of the asset is reduced to its recoverable ~~amount immediately.~~amount.
Goodwill acquired in a business combination is included in intangible assets. Goodwill is not amortized, but ~~tested for~~is subject to an impairment ~~annually to~~test at the ~~extent of reporting~~cash-generating unit level every year, and ~~when~~whenever there is ~~any indication~~an indicator that goodwill is impaired.
Goodwill resulting from an acquisition of ~~impairment.~~
a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.
Goodwill ~~acquired~~ is allocated to each of the Group’s cash-generating ~~units (“CGU”)~~unit (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. ~~A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the CGU may be impaired.~~ If the recoverable amount of the ~~CGU~~cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the ~~CGU~~unit and then to the other assets of the ~~CGU~~unit on a~~pro-rata~~ pro rata basis based on the carrying amount of each asset in the ~~CGU.~~unit. Any impairment loss for goodwill is recognized directly in ~~net income in the consolidated statements of comprehensive income.~~profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.
(14) Impairment ofnon-monetary assets
Intangible assets with indefinite useful lives ~~such as goodwill and membership,~~ or intangible assets that are not yet available for use are tested for impairment annually, regardless of whether or not there is any indication of impairment. All other assets are tested for impairment by estimating the recoverable amount when there is an objective indication that the carrying amount may not be ~~recoverable, and if the indication exists. The Group estimates the recoverable amount.~~recoverable. Recoverable amount is the higher of value in use ~~and~~or net fair value, less costs to sell. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and such impairment loss is recognized immediately in net income.
(15) Leases
~~Leases~~As the Group applied IFRS 16 using the revised retrospective method, the comparative financial information has not been prepared. The Group also applied IAS 17 and IFRIC 4. The accounting policies in accordance with IAS 17 and IFRIC 4 are ~~classified~~separately disclosed.
1) Accounting policy applied as ~~finance leases whenever~~of January 1, 2019.
The Group determines whether the ~~terms~~agreement is a lease or includes a lease at the time of the agreement. In exchange for consideration in the contract, if the control over the use of the identified asset is transferred for a period of time, the contract is a lease or includes a lease. In determining whether a contract transfers control of the use of the identified asset, the Group uses the definition of a lease in IFRS 16.
This accounting policy applies to contracts entered into as of January 1, 2019.
1) The Group as a lessee
The Group recognizes theright-of-use asset and the lease liability at the commencement date of the lease. Theright-of-use asset is measured at cost, which comprises the amount of the initial measurement of the lease ~~transfer~~liability, lease payments made at or before the commencement date(less any lease incentives received), initial direct costs, and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located.
Theright-of-use asset is subsequently depreciated on a straight-line basis from the commencement of the lease to the end of the lease term. However, if the lease transfers ownership of the underlying asset to the lessee by the end of the lease term or if the cost of theright-of-use asset reflects that the lessee will exercise a purchase option, the lessee depreciates theright-of-use asset same as a fixed asset from the commencement date to the end of the useful life of the underlying asset. Theright-of-use asset may be reduced by an impairment of the underlying asset or adjusted by remeasurement of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that cannot be readily determined, the Group uses its incremental borrowing rate. The Group generally uses the incremental borrowing rate.
The lease payments included in the measurement of the lease liability comprise the following:
Fixed payments (includingin-substance fixed payments)
Variable lease payments that depend on an index(or a rate), initially measured using the index or rate as at the commencement date
Amounts expected to be payable by the lessee under residual value guarantees
The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, lease payments of the extended period if the lessee is reasonably certain to exercise extension option, and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease
The lease liability is subsequently increased be the interest expense recognized for the lease liability and decreased by reflecting the payment of the lease payments. The lease liability is remeasured if the future lease payments change depending on changes in the index(or a rate), changes in the expected amount to be paid under the residual value guarantee, and changes in the assessment of whether the purchase or extension option is reasonably certain to be exercised or not to exercise the terminate option.
When remeasuring a lease liability, the relatedright-of-use asset is adjusted and if the carrying amount of theright-of-use asset decreases to zero, the remeasurement amount is recognized in profit or loss.
The Group applies its judgment when determining the lease term for some lease contracts that include the extension option. The assessment of whether the Group is reasonably certain to exercise the option significantly affects the lease term and therefore has a significant impact on the amount of lease liabilities and theright-of-use asset.
In the statement of financial position, the Group classified theright-of-use assets that do not meet the definition of investment property as ‘premises and equipment’ and the lease liabilities as ‘other financial liabilities.’
The Group has chosen a practical expedient that does not recognize theright-of-use asset and lease liabilities for short-term leases with a lease term less than 12 months and leases for which the underlying asset is of low value. The Group recognizes the lease payments associated with those leases as an expense on a straight-line basis over the lease term.
2) The Group as a lessor
At the date of the agreement or the effective date of the modification containing the lease element, the Group allocates the consideration of the contract to each lease element on the basis of its relative stand-alone price.
As a lessor, the Group classifies its leases as either an operating lease or a finance lease at the commencement date.
The Group subsequently judges whether the lease transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset, otherwise a lease is classified as an operating lease.
If the agreement contains both lease andnon-lease elements, the Group applies IFRS 15 to allocate the consideration of the contract.
The Group applies the derecognition and impairment provisions of IFRS 9 to its net investment in the lease. The Group also carries out regular review of the unguaranteed residual value used to calculate total lease investment.
The Group recognizes lease payments from operating lease as income on a straight-line basis.
The accounting policy that the Group has applied as a lessor is not different from IFRS 16.
2) Accounting policy applied until January 1, 2019
The Group classifies a lease as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset to the ~~lessee. All~~lessee, and all lease contracts other than finance leases are classified as operating leases.
1) AsThe Group as a ~~lessor~~lessee
~~Amounts due from lessees under~~In case of finance leases, ~~are recognized as receivables at~~ the lesser amount of the Group’s net investment in the leases being the minimum lease payments and any unguaranteed residual value discount interest rate implicit in the lease. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.
Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. Operating lease assets are included within other assets and depreciated over their useful lives.
~~2) As a lessee~~
~~Assets held under finance leases are initially recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at~~ the present value of the minimum lease ~~payments. The corresponding liability to~~payments at the ~~lessor is included~~commencement date of the lease term or the fair value of the leased asset are recognized as financial lease assets and liabilities in the ~~consolidated statements~~statement of financial ~~position as a finance lease obligation.~~position. Lease payments are ~~apportioned between finance expenses~~allocated as interest expense and ~~reduction~~repayment of the lease ~~obligation~~liability so ~~as to achieve a constant~~that the same period interest rate ~~of interest on~~is calculated for the ~~remaining~~ balance of the liability. ~~Contingent rentals arising under finance leases~~Adjustment to the lease payments are ~~recognized~~accounted for as expenses induring the ~~periods in which they are incurred.~~period.
~~Operating~~The operating lease payments are recognized as an expense on a straight-line basis ~~over the lease term, except where another~~if there is no other systematic basis that is more representative of the ~~time~~ pattern in which ~~economic benefits~~benefit from the ~~leased asset are consumed. Contingent rentals arising under~~use of underlying asset. Adjustment lease payments from the operating leases are ~~recognized~~accounted for as expenses induring the period in which they are incurred.
2) The Group as a lessor
The Group recognizes a finance lease receivable equal to the present value of the minimum lease and thenon-guaranteed residual value, which is the net investment of the finance lease. The accounting for recognizing interest income by reporting period is carried out on a financial lease receivable after the commencement date of the lease term by applying a method in which a certain interest rate of the Group’s net investment in the lease is calculated.
The Group recognizes income from lease payments of operating lease on a straight line basis over the lease term, and the direct costs of the lease incurred during the negotiation and contract phase of the operating lease is added to the carrying value of the lease asset and recognized as an expense over the lease term on a straight-line basis. Operating lease assets are included in other assets and are depreciated over their economic useful life.
(16) Derivative instruments
Derivative instruments are classified as ~~forward,~~forwards, futures, ~~option,~~options and ~~swap,~~swaps, depending on the types of transactions and are classified at the point of transaction as either trading or hedging ~~depending~~based on ~~the~~its purpose.
Derivatives are initially
recognized at fair value at the date ~~the derivative~~of contract ~~is entered into~~ and are subsequently measured ~~to their~~at fair value at the end of each reporting period. The resulting gain or loss is recognized in net income immediately unless the derivative is designated ~~and~~or effective as a hedging instrument. If derivatives have been designated as hedging instruments and if it is effective, the point of recognition of gain or loss depends on the characteristics of hedging relationship.
~~A derivative embedded~~Derivatives that have positive (+) fair values are recognized as financial assets and those that have negative (-) fair values are recognized as financial liabilities. Derivatives are not offset in the consolidated financial statements unless they have legally enforceable right to set off or are intended to set off.
1) Embedded derivatives
Embedded derivatives are components of a hybrid financial instrument that includes anon-derivative host contract. It has an effect of modifying part of cash flows of the hybrid financial instrument similar to an independent derivative.
Embedded derivatives that are part of a hybrid contract of which the host contract is ~~accounted for~~a financial asset within the scope of IFRS 9 is not separated. The classification is done by considering the hybrid contract as a ~~stand-alone~~whole, and subsequent measurement is either at amortized cost or fair value.
If embedded derivatives are part of a hybrid contract of which the host contract is not a financial asset within the scope of IFRS 9 (e.g. financial liability), then these are treated as separate derivatives if embedded derivatives meet the definition of a derivative, ~~if its economic~~ characteristics & risk of the embedded derivatives are not closely related to ~~the economic characteristics~~that of host contract, and if the host ~~contract; unless the entire~~ contract is not measured at ~~fair value with changes in fair value recognized in net income.~~FVTPL.
2) Hedge accounting
The Group ~~designates~~is applying IFRS 9 in regard to hedge accounting. The Group is designating certain derivatives as hedging instrument against fair value changes in relation to the interest rate risk, foreign currency translation and interest rate risk, and foreign currency translation risk.
The Group is documenting the relationship between hedging instruments ~~to (a) hedge~~and hedged items at the commencement of hedging in accordance with their purpose and strategy. Also, the ~~exposure to~~Group documents at the commencement and subsequent dates whether the hedging instrument effectively counters the changes in fair value of ~~a recognized asset or liability or~~hedged items. A hedging instrument is effective only when it meets all the following criteria:
When there is an unrecognized firm commitment (fair value hedge); (b) hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction (cash flow hedge); and (c) hedge of a net investment in a foreign operation.
~~At the inception of the hedge relationship, the Group documents the~~economic relationship between the hedged items and hedging instruments.
When the effect of credit risk is not stronger than the change in value due to the economic relationship between the hedged items and hedging instruments.
When the hedge ratio of hedging relationship is equal to the proportion of the number of items that the group actually hedges and the number of hedging instruments that the Group actually uses to hedge the number of hedged items.
When a hedging relationship no longer meets the hedging effectiveness requirements related to hedge ratio, but when the purpose of risk management on designated hedging relationship is still maintained, the hedge ratio of the hedging relationship is adjusted so that hedging relationship may meet the requirements again (Hedge ratio readjustment).
The Group has designated derivatives as hedging instrument except for the portion on foreign currency basis spread. The fair value change due to foreign currency basis spread is recognized in other comprehensive income and is accumulated in equity. If the hedged item ~~along with its risk management objectives~~is related to transactions, the accumulated other comprehensive income is reclassified to profit or loss when the hedged item affects the profit or loss. However, whennon-monetary items are subsequently recognized due to hedged items, the accumulated equity is removed from the equity directly, and ~~its strategy for undertaking various hedge transactions. Furthermore, at~~is included in the ~~inception~~initial book value of the ~~hedge and~~recognizednon-monetary items. Such transfers does not affect other comprehensive income. But if part or all of accumulated equity is not expected to be recovered in the future periods, the amount not expected to be recovered is immediately reclassified to profit or loss. If the hedged item is time-related, then the foreign currency basis spread on ~~an ongoing basis,~~ the ~~Group documents whether~~day the derivative is designated as a hedging instrument that is related to the hedged item is reclassified to profit or loss over the term of the hedge.
3) Fair value hedge
Gain or loss arising from valid hedging instrument is ~~highly effective in offsetting changes in fair values or cash flows of the hedged item.~~
~~1) Fair value hedge~~
~~Changes in the fair value of derivatives that are designated and qualified as fair value hedges are~~ recognized in ~~net income immediately, together with any changes in the fair value of the hedged asset~~profit or ~~liability that are attributable to the hedged risk. Hedge accounting is discontinued when the Group revokes the hedging relationship or~~loss. However, when the hedging instrument mitigates risks on equity instruments designated as financial assets at FVTOCI, related gain or loss is ~~no longer qualified for hedge accounting. If the hedging instrument no longer meets the criteria for hedge accounting, the~~recognized in other comprehensive income.
The book value of hedged items that are not measured in fair value ~~adjustment~~is adjusted by the changes in fair value arising from the hedged risk, with resulting gain or loss reflected in net income. In case of debt instruments measured at FVTOCI, book value is an amount that is already adjusted to fair value and thus gain or loss arising from the ~~carrying amount~~hedged risk is recognized in profit or loss instead of other comprehensive income without adjustments in book value. When the hedged item is equity instruments measured at FVTOCI, the gain or loss arising from hedged risk is retained at other comprehensive income in order to match the gain or loss with hedging instruments.
When gains or losses arising from the hedged risk are recognized in profit or loss of the current term, they are recognized as items related to the hedged items.
Hedge accounting ceases to apply only when hedging relationship (or part of it) does not meet the requirements of hedge accounting (even after hedging relationship readjustment, if applicable). This treatment holds in case of lapse, disposal, expiry and exercise of hedging instruments, and this cease of treatment applies prospectively. The fair value adjustments made to book value of hedged item due to hedged risk is amortized ~~to net income~~ from ~~that~~the date ~~to maturity using the effective interest method.~~of discontinuance of hedge accounting and is recognized in profit or loss.
2)4) Cash flow hedge
The Group recognizes the effective portion of changes in the fair value of derivatives and other valid hedging instruments that are designated and qualified as cash flow hedges ~~is recognized~~ in other comprehensive ~~income.~~income to the extent of cumulative fair value changes of the hedged item from the starting date of hedge accounting and it is cumulated in the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognized immediately in net income.
Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to net income when the hedged item ~~is recognized in~~affects net income. However, whennon-monetary assets or liabilities are subsequently recognized due to expected transactions involving hedged items, the valuation gain or loss accumulated in the equity as other comprehensive income is removed from the equity and included in the initial book value of the recognizednon-monetary assets or liabilities. Such transfers does not affect other comprehensive income. Also, if the cash flow hedge reserve is loss and accumulated other comprehensive income is a loss and part or all of the losses are not expected to be recovered in the future periods, the said amount is immediately reclassified to profit or loss.
Hedge accounting ~~is discontinued~~ceases to apply only when hedging relationship (or part of it) does not meet the ~~hedging instrument is expired or sold, or it is no longer qualified for~~requirements of hedge accounting (even after hedging relationship readjustment, if applicable). This treatment holds in case of lapse, disposal, expiry and ~~any cumulative~~exercise of hedging instruments, and this cease of treatment applies prospectively. At the point of cessation of cash flow hedge, the valuation gain or loss inrecognized as accumulated other comprehensive income ~~remains in~~continues to be recognized as equity, ~~until~~and is reclassified to profit or loss when the ~~forecast~~expected transaction is ultimately recognized ~~in net income. When a forecasted transaction is~~as profit or loss. However, when transactions are no longer expected to occur, the valuation gain or loss ~~accumulated in equity is recognized immediately in net income.~~
~~3) Net investment hedge~~
~~Hedges~~ of ~~net investments in foreign operations are accounted for similarly to cash flow hedges. The effective portion of changes in the fair value of the~~ hedging instrument is recognized ~~in equity while the ineffective portion is recognized immediately in net income. The cumulated gain and loss in~~as accumulated other comprehensive income is immediately reclassified ~~from equity~~ to profit or ~~loss on the disposal or partial disposal of the foreign operations.~~loss.
(17) Assets (or ~~Disposal~~disposal group) held for sale
The Group classifies anon-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. ~~For this, thenon-current~~ ~~asset~~
(or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. For the sale to be highly probable, the appropriate level of management must be committed to a plan to sell the asset (or disposal group), and an active programme to locate a buyer and complete the plan must have been initiated. In addition, the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a~~non-controlling~~ ~~interest in its former subsidiary after the sale.~~
When the Group is committed to a sale plan involving disposal of an investment, or a portion of an investment, in an associate or joint venture, the investment or the portion of the investment that will be disposed of is classified as held for sale when the criteria described above are met, and the Group discontinues the use of the equity method in relation to the portion that is classified a held for sale. Any retained portion of an investment in an associate or a joint venture that has not been classified as held for sale continues to be accounted for using the equity method. The Group discontinues the use of the equity method at the time of disposal when the disposal results in the Group losing significant influence over the associate or joint venture.
~~After the disposal takes place, the Group accounts for any retained interest in the associate or joint venture in accordance with IAS 39~~~~Financial Instruments: Recognition and Measurement~~ ~~unless the retained interest continues to be an associate or a joint venture, in which case the Group uses the equity method.~~
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.
(18) Provisions
~~The Group recognizes provision~~Provisions are recognized if it has a present or contractual obligations as a result of the past event, it is probable that an outflow of resources will be required to settle the obligation and the amount of the obligation is reliably estimated. ~~Provision~~A provision is not recognized for the future operating losses.
The Group recognizes ~~provision~~provisions related to the ~~unused portion of point rewards earned by credit card customers,~~ payment guarantees, loan commitment and litigations. ~~Where~~Under the terms of lease agreement, the cost incurred by the Group to recover the leased asset to its original state are recognized as provisions at the commencement of the lease or during a specific period in which the obligation is incurred as a result of the using the asset. The provisions are measured as the best estimate of the expenditure required to ~~restore a leased property that~~recover the asset, which is ~~used as a branch,~~regularly reviewed and sated to ~~an agreed condition after~~ the ~~contractual term expires, the present value of expected amounts to be used to dispose, decommission or repair the facilities is recognized as an asset retirement obligation.~~new situation.
Where there are a number of similar obligations, the probability that an outflow will be required in settlement is determined by considering the obligations as a whole. Although the likelihood of outflow for any one item may be small, if it is probable that some outflow of resources will be needed to settle the obligations as a whole, a provision is recognized.
At the end of each reporting period, the remaining provision balance is reviewed an assessed to determine if the current best estimate is being recognized.
(19) Equity instruments issued by the Group
1) Capital and compound financial instruments
The Group classifies a financial instrument that it issues as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. ~~An instrument is classified as a~~A financial liability ~~if it~~ is a contractual obligation to deliver cash or another financial asset or to ~~exchange financial assets or financial liabilities on potentially unfavourable terms.~~another entity. An equity instrument is ~~classified as equity if it~~any contract that evidences a
residual interest in the assets of ~~the Group~~an entity after ~~the deduction~~deducting all of its liabilities. The ~~components of a~~ compound financial instruments are financial instruments where it is neither a financial liability nor an equity instrument ~~issued by the Group are classified~~because it was designed to contain both equity and ~~accounted for separately as financial liabilities or equity as appropriate.~~debt elements.
If the Group reacquires its own equity instruments, ~~those instruments (“treasury shares”)~~the consideration paid including the direct transaction costs (net of tax expense) are presented as a deduction from total equity until such instruments are retired or reissued. When these instruments are reissued, the consideration received (net of direct transaction costs) is included in the shareholder’s equity.
2) Hybrid securities
The Group classifies hybrid securities that have the unconditional right to avoid contractual obligations, such as to deliver cash or other financial assets in relation to financial instruments into equity instruments and presents as part of equity. ~~The gain or loss on~~Meanwhile, hybrid securities issued by subsidiaries of the ~~purchase, sale, issue, or cancellation of treasury shares~~group are classified asnon-controlling interests according to the criteria, and the distribution paid is ~~not recognized~~treated as net profit attributable tonon-controlling interests in ~~net~~the consolidated comprehensive income ~~but recognized directly in equity.~~statement.
(20) Financial guarantee contracts
~~Under a~~A financial guarantee contract is a contract where the ~~Group,~~issuer must pay a certain amount of money in ~~return for a fee, undertakes~~order to ~~meet a customer’s obligations under~~compensate losses suffered by the ~~terms of~~creditor when debtor defaults on a debt instrument ~~if the customer fails to do so.~~in accordance with original or modified contractual terms.
A financial guarantee is ~~recognized as a liability;~~ initially measured at fair value and ~~will be amortized, if not designated as at FVTPL,~~is subsequently measured at the higher of ~~its initial~~the amounts below unless it is designated to be measured at FVTPL or when it arises from disposal of an asset.
Loss allowance in accordance with IFRS 9
Initial book value less ~~cumulative amortization and any provision under the contract~~accumulated profit measured in accordance with ~~provision policy. Amortization is calculated so as to recognize fees receivable in profit or loss over the period of the guarantee.~~IFRS 15
(21) Employee benefits and pensions
The Group recognizes the undiscounted amount of short-term employee benefits ~~expecting payment~~expected to be paid in exchange for the services ~~when employee renders services.~~rendered by the employees. Also, the Group recognizes expenses and liabilities in the case of accumulating compensated absences when the employees render ~~service~~services that ~~increases~~entitle their ~~entitlement~~right to future compensated absences. ~~Though~~Similarly, the Group ~~may have no legal obligation to pay a bonus, considering some cases, the Group has a practice of paying bonuses. In such cases, the Group has a constructive obligation, and thus~~ recognizes expenses and liabilities for customary profit distribution or bonuses when the employees render ~~service.~~services, even though the Group does not have legal obligation to do so because it can be construed as constructive obligation.
The Group is operating defined contribution ~~retirement pension~~ plans and defined benefit ~~retirement pension~~ plans. Contributions to defined contribution ~~retirement pension~~ plans are recognized as an expense when employees have rendered ~~service~~services entitling them to receive the ~~contributions.~~benefits. For defined benefit ~~retirement pension~~ plans, the ~~cost of providing benefits~~defined benefit liability is ~~determined~~calculated through an actuarial assessment using the ~~Projected Unit Credit Method, with actuarial valuations being carried out at the~~projected unit credit method every end of ~~each~~the reporting ~~period.~~period, conducted by a professional actuaries. Remeasurement, comprising actuarial gains and losses, the return on plan assets (excluding the amount included in net interest from net defined benefit liability (asset)), and the effect of the changes to the asset ceiling ~~(if applicable) and the return on plan assets (excluding interest),~~ is reflected immediately in the separate statement of financial position with a charge or credit recognized in other comprehensive income in the period in which they occur.
Remeasurement recognized in ~~other~~the consolidated statement of comprehensive income is ~~reflected immediately in retained earnings and will~~ not be reclassified to profit or ~~loss.~~loss in the subsequent periods. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are composed of service cost (including current service cost and past service cost, as well as gains and losses on ~~curtailments and~~ settlements), net interest expense (income), and remeasurement.
The Group presents the service cost and net interest expense (income) components in profit or loss, and the remeasurement component in other comprehensive income. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognized in the consolidated statement of financial position represents the actual deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is recognized as an asset limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Liabilities for termination benefits are recognized at the earlier of either 1)the date when the Group ~~has become not~~is no longer able to cancel its proposal for termination benefits or 2)the date when the Group has recognized the cost of restructuring that accompanies the payment of termination benefits.
(22) Income taxes
Income tax expense ~~represents the sum~~is composed of ~~the~~current tax ~~currently payable~~ and deferred tax. ~~Current income tax expense approximates taxes to be paid or refunded for the current period and deferred~~That is, income tax expense is ~~provided on an asset~~composed of taxes payable or refundable during the period and ~~liability~~deferred taxes calculated by applying asset-liability method ~~whereby deferred tax assets are recognized for~~to taxable and deductible temporary differences ~~including~~arising from operating ~~losses~~loss and tax credit ~~carryforwards, and deferred tax liabilities are recognized for taxable temporary differences.~~carryforwards. Temporary differences are the differences between the carrying values of assets and liabilities for financial reporting purposes and their tax bases. Deferred income tax benefit or expense is ~~then~~ recognized for the change in deferred tax assets or ~~liabilities between periods.~~liabilities. Deferred tax assets and liabilities are measured atas of the reporting date using the enacted or substantively enacted tax rates ~~on the date of enactment or substantive enactment that are~~ expected to apply in the period in which the liability is settled or ~~the~~ asset is realized. Deferred tax assets, including the carryforwards of unused tax losses, are recognized to the extent it is probable that the deferred tax assets will be realized.
Deferred income tax assets and liabilities are offset if, and only if, the Group has a legally enforceable right to offset current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority ~~on either~~or when the ~~taxable~~ entity ~~or different taxable entities which intend either~~intends to settle current tax liabilities and assets on a net ~~basis.~~basis with different taxable entities.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent ~~that~~ it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill. Deferred tax assets or liabilities are not recognized if they arise from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Current and deferred ~~tax~~taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity or when it arises from business combination.
The tax uncertainty arises from the compensation claim filed by the Group, and refund litigation for the amount of tax levied by the tax authority due to differences in ~~which case,~~tax law analysis. In response, the ~~current and deferred~~Group paid taxes in accordance with IFRIC 23 due to the tax ~~are also~~authority’s claim, but recognized as a corporate tax asset if it is highly probable of a refund in ~~other comprehensive income or directly in equity respectively.~~the future.
(23) ~~Earnings~~Criteria of calculating earnings per share (“EPS”)
Basic EPS is a calculation of net income per each common stock. It is calculated by ~~earnings subtracting the dividends paid to holders of preferred stock and hybrid securities from the~~dividing net income attributable to ordinary shareholders ~~from the statements of comprehensive income and dividing~~ by the ~~weighted average~~weighted-average number of common shares outstanding. Diluted EPS is calculated by adjusting the earnings and number of shares for the effects of all dilutive potential common shares.
(24) Share-based payment
For cash-settled share-based payment transactions that provide cash in return for the goods or services received, the Group measures the goods or services received, and the corresponding liability at the fair value and recognizes as employee benefit expenses and liabilities during the vesting period. The fair value of the liability is remeasured at the end of each reporting period and the settlement date until the liability is settled, and changes in fair value are recognized as employee benefits.
3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS
The significant accounting estimates and assumptions are ~~continually~~continuously being evaluated ~~and are~~ based on numerous factors including historical experiences and ~~various factors including~~ expectations of future events ~~that are~~ considered to be ~~reasonable.~~reasonably possible. Actual results can differ from those estimates based on such definitions.
The accounting estimates and assumptions that contain significant ~~judgments which management has made about~~risk of materially changing current book values of assets and liabilities in the ~~application of the Group’s~~next accounting ~~policies and key sources of uncertainty in estimate do not differ from those used in preparing the consolidated financial statements for the year ended December 31, 2016.~~periods are as follows:
(1) Income taxes
The Group ~~is subject to~~has recognized current and deferred taxes based on best estimates of expected future income ~~taxes in numerous jurisdictions, which requires significant judgment in determining realization~~tax effect arising from the Group’s operations until the end of ~~deferred tax. Actual~~the current reporting period. However, actual tax payment may not be ~~different from~~identical to the ~~provision estimate~~related assets and/or liabilities already recognized, and ~~such difference~~these differences may affect current taxes and deferred tax assets/liabilities at the time when income tax ~~expense. There~~effects are ~~various transactions and calculations for which the~~
~~ultimate tax determination is uncertain.~~finalized. Deferred tax assets relating to tax losses carried forward and deductible temporary differences are recognized only to the extent that it is probable that future taxable profit will be available against which the tax losses carried forward and the deductible temporary differences can be utilized. ~~This assessment requires significant management estimates and judgments. Future~~In this case the Group’s evaluation considers various factors such as estimated future taxable profit ~~is estimated~~ based on ~~among other relevant factors,~~ forecasted operating results, which are based on historical financial performance. InThe Group is reviewing the book value of deferred tax assets every end of the reporting period and in the event that the ~~Group was to determine that it would be able to realize its~~possibility of earning future taxable income changes, the deferred ~~income~~ tax assets ~~in the future at an amount different than their net recorded amount, the Group would make an adjustment~~are adjusted up to ~~the provision for~~taxable income ~~taxes at such time.~~sufficient to use deductible temporary differences.
(2) Valuation of financial instruments
Financial ~~instruments classified asheld-for~~ ~~trading or designated as~~assets at FVTPL and ~~financial instruments classified as AFS~~FVTOCI are recognized in the consolidated financial statements at fair value. All derivatives are measured at fair value. Valuation techniques are required in order to determine fair values of financial instruments if observable market prices do not exist. Financial instruments ~~which~~that are not actively traded ~~in active market~~and have low price transparency will have less objective fair value and require broad judgment in liquidity, concentration, uncertainty in market factors and assumption in price determination and other risks. ~~The fair value of those assets is established by using valuation techniques.~~
As described ~~in the significant accounting policies~~ in Note2-(9)-5), ~~‘ Fair~~‘Fair value of financial ~~assets and liabilities’~~instruments’, ~~a range of~~when valuation techniques ~~which include market approach and income approach and internally developed models that incorporate various types of assumptions and variables,~~ are used to determine the fair value of a financial ~~instruments.~~instrument, various general and internally developed techniques are used, and various types of assumptions and variables are incorporated during the process.
(3) Impairment of ~~loan and receivables~~financial instruments
~~Impairment~~IFRS 9 requires entities to measure loss for loan and receivables carried at amortized cost is measured as the difference between such assets’ carrying value and the present value of estimated recoverable cash flows (excluding any future loss events that have not occurred) discounted by using the initial effective interest rate. In the event that the estimated cash flowallowance equal to12-month expected credit losses or lifetime expected credit losses after classifying financial assets into one of the three stages, which depends on the degree of increase in credit risk after their initial recognition.
Stage 1
Stage 2
Stage 3
Credit risk has not significantly increased
since initial recognition^(*)
Credit risk has
significantly increased
since initial recognition
Credit has been impaired
Allowance for expected credit losses
Expected12-month credit losses:
Expected credit losses due to possible defaults on financial instruments within a12-month period from theyear-end.
Expected lifetime credit losses:
Expected credit losses from all possible defaults during the expected lifetime of the financial instruments.
(*)
Credit risk may be considered not to have been significantly increased when credit risk is low atyear-end.
The Group has estimated the allowance for credit losses based on reasonable and supportable information that was available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
Probability of default (PD) and Loss given default (LGD) for each category of financial asset are being calculated by considering factors such as debtor type, credit rating and portfolio. The estimates are regularly being reviewed in order to reduce discrepancies with actual losses.
In measuring the expected credit losses, the Group is ~~affected~~using reasonable and supportable macroeconomic indicators such as economic growth rates, interest rates, market index rates, etc., in order to forecast future economic conditions.
The Group is conducting the following procedures to estimate and apply future economic forecast information.
Development of prediction models by ~~one or more loss events occurred~~analyzing the correlation between default rates of corporate and retail exposures per year and macroeconomic indicators
Calculation of predicted default rate incorporating future economic forecasts by applying estimated macroeconomic indicators provided by verified institutions such as Bank of Korea and National Assembly Budget Office to the prediction model developed.
At the end of every reporting period, the Group evaluates whether credit risk reflecting forward-looking information has significantly been increased since the date of initial recognition. When evaluating whether credit risk has significantly been increased, the changes in the probability of default over the financial instrument’s remaining life is used instead of changes in the amount of expected credit losses. The Group performs the above evaluation with distinctions made to corporate and retail exposures, and indicators of significant increase in credit risk are as follows:
Corporate Exposures
Retail Exposures
Asset quality level ‘Precautionary’ or lower Asset quality level ‘Precautionary’ or lower
More than 30 days past due More than 30 days past due
‘Warning’ level in early warning system Significant decrease in credit rating^(*)
Debtor experiencing financial difficulties
(Capital impairment, Adverse opinion or Disclaimer of opinion by external auditors)
Significant decrease in credit rating^(*)
(*)
Determining whether there has been a significant decrease in the credit rating of corporate and retail exposures applies only to credit ratings that are measured through12-month expected credit loss. The Woori Bank, which is an important subsidiary of the Group, has applied the above indicators of significant decrease in credit rating since initial recognition as follows, and the estimation method is regularly being monitored.
Credit rating
Significant increased indicator of the
credit rating
Corporate AAA ~ A+ More than or equal to 4 steps
A- ~ BBB More than or equal to 3 steps
BBB- ~ BB+ More than or equal to 2 steps
BB ~ BB- More than or equal to 1 step
Retail 1 ~ 3 More than or equal to 3 steps
4 ~ 5 More than or equal to 2 steps
6 ~ 10 More than or equal to 1 step
The Group sees no significant increase in credit risk after initial recognition for debt securities, etc. with a credit rating of A + or higher, which are deemed to have low credit risk at the end of the reporting period.
The Group concludes that credit is impaired when financial assets are under conditions stated below:
When principal of loan is overdue for 90 days or longer due to significant deterioration in credit
For loans overdue for less than 90 days, when it is determined that not even a portion of the loan will be recovered unless claim actions such as disposal of collaterals are taken
When other objective indicators of impairment has been noted for the financial asset.
The Group determines which loan is subject towrite-off in accordance with internal guidelines, and writes off loan receivables when it is determined that the ~~financial asset~~loans are practically irrecoverable. For example, loans are practically irrecoverable when application is ~~impaired.~~
~~The objective evidences that a financial asset~~made for rehabilitation under the Debtor Rehabilitation and Bankruptcy Act and loans are confirmed as irrecoverable by the court’s decision to waive debtor’s obligation, or when it is ~~impaired incorporate below loss events:~~
~~1) Financial assets that are individually significant~~
~~Delinquent loans~~
~~Debt in restructuring~~
~~Probable state~~impossible to recover the loan amount through legal means such as auctioning of debtor’s ~~bankruptcy~~assets or ~~liquidation~~
~~Occurrence~~through any other means of ~~significant reduction in~~recovery available. Notwithstanding the ~~value of securities~~
~~Breach of limit or debt covenant~~
~~Deterioration of operating performance~~
~~2) Financial assets that are not individually significant~~
~~Repayment status of debtor or observable macro-economic indexes~~
The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant (individual evaluation of impairment), and individually or collectively for financial assets that are not individually significant. Ifwrite-off, the Group ~~determines that no objective evidence~~may still exercise its right of ~~impairment exists for an individually assessed financial asset, it includes~~collection after the asset has been written off in ~~a group of financial assets~~accordance with ~~similar credit risk characteristics and collectively assesses them for impairment (collective evaluation of impairment).~~
~~There are two components to the Group’s loan impairment provisions (individual and collective).~~
~~Individual assessment of impairment losses are calculated by discounting the expected future cash flows of a loan at~~ its original effective interest rate and comparing the resultant present value with the loan’s carrying amount. This process normally encompasses management’s best estimate, such as operating cash flow of debtor and net realizable value of any collateral held and the timing of anticipated receipts.
Collective assessment of impairment losses are established on a portfolio basis using the methodology based on historical loss experience. The methodology based on historical loss experience is used to estimate inherent incurred loss on groups of assets for collective evaluation of impairment. Such methodology incorporates factors such as type of product and debtors, credit rating, portfolio size, loss emergence period and recovery period and applies probability of default on each assets (or pool of assets) and loss given default by type of collateral. Also, consistent assumptions are applied to form a formula-based model in estimating inherent loss and to determine factors on the basis of historical loss experience and current condition. The methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.collection policies.
(4) Defined benefit plan
The Group operates a defined benefit ~~retirement~~ pension ~~plans.~~plan. Defined benefit ~~retirement pension plans are measured through~~obligation is calculated at every end of the reporting period by performing actuarial valuation, and ~~the Group estimates~~estimation of assumptions such as discount rate, ~~future~~expected wage growth rate and mortality ~~rates~~rate is required to ~~produce~~perform such actuarial valuation. ~~Defined~~The defined benefit ~~retirement pension plans contain significant uncertainty in these estimates~~plan, due to ~~their~~its long-term ~~characteristic.~~nature, contains significant uncertainties in its estimates.
4. RISK MANAGEMENT
The Group’s operating activity is exposed to various financial risks. The Group is required to ~~analyse~~analyze and assess the level of complex risks, and determine the permissible level of risks and manage such risks. The Group’s risk management procedures have been established to improve the quality of assets for holding or investment purposes by making decisions as how to avoid or mitigate risks through the identification of the source of the potential risks and their impact.
The Group has established an approach to manage the acceptable level of risks and reduce the excessive risks in financial instruments in order to maximize the profit given risks present, for which the Group has implemented processes for risk identification, assessment, control, and monitoring and reporting.
The risk is managed by the risk management department in accordance with the Group’s risk management policy. The Risk Management Committee makes decisions on the risk strategies such as the ~~avoidance~~allocation of ~~concentration on~~risk capital ~~at risk~~ and the establishment of acceptable level of risk.
(1) Credit risk
Credit risk represents the possibility of financial losses incurred when the counterparty fails to fulfill its contractual obligations. The ~~goals~~goal of credit risk management ~~are~~is to maintain the Group’s credit risk exposure to a permissible degree and to optimize its rate of return considering such credit risk.
1) Credit risk management
The Group considers the probability of failure in performing the obligation of its counterparties, credit exposure to the counterparty, the related default risk and the rate of default loss. The Group uses the credit rating model to assess the possibility of counterparty’s default risk; and when assessing the obligor’s credit grade, the Group utilizes credit grades derived ~~using~~from statistical methods.
In order to manage credit risk limit, the Group establishes the appropriate credit line per obligor, company or industry. It monitors obligor’s credit line, total exposures and loan portfolios when approving the loan.
The Group mitigates credit risk resulting from the obligor’s credit condition by using financial and physical collateral, guarantees, netting agreements and credit derivatives. The Group has adopted the entrapment method to mitigate its credit risk. Credit risk mitigation is reflected in qualifying financial collateral, trade receivables, guarantees, residential and commercial real estate and other collaterals. The Group regularly performs a revaluation of collateral reflecting such credit risk mitigation.
2) Maximum exposure to credit risk
The Group’s maximum exposure to credit risk ~~refers~~shows the uncertainties related to the maximum possible variation of financial assets’ net value as a result of changes in the specific risk factors, prior to the consideration of collaterals that are recorded at net book value ~~of financial assets net of~~after allowances ~~which shows the uncertainties of maximum changes of net value of financial assets attributable to a particular risk without considering collateral~~ and other credit ~~enhancements obtained.~~enhancements. However, the maximum exposure is the fair value amount (recorded on the books) for derivatives, maximum contractual obligation for payment guarantees and ~~loan commitment~~unused amount of commitments for loan ~~contracts.~~commitment.
The maximum exposure to credit risk is as follows (Unit: Korean Won in millions):

   December 31,
2016    December 31,
2017
Loans and receivables:

Korean treasury and government agencies
   16,058,305    8,823,584
Banks
   20,242,260    26,845,309
Corporates
   88,985,566    90,570,551
Consumers
   133,106,502    140,866,760




Sub-total
   258,392,633    267,106,204




Financial assets at fair value through profit or loss (“FVTPL”):

Deposits indexed to gold prices
   26,180    25,972
Debt securities held for trading
   2,644,916    2,644,333
Designated at FVTPL
   4,348    9,694
Derivative assets for trading
   2,898,295    3,115,775




Sub-total
   5,573,739    5,795,774




Available-for-sale (“AFS”) debt securities
   16,541,888    13,229,244
Held-to-maturity (“HTM”) securities
   13,910,251    16,749,296
Derivative assets for hedging
   140,577    59,272
Off-balance sheet items:

Guarantees
   14,761,784    12,859,715
Loan commitments
   83,795,496    80,760,325




Sub-total
   98,557,280    93,620,040




Total
   393,116,368    396,559,830




   December 31,
2018    December 31,
2019
Loans and other financial assets at amortized cost
Korean treasury and government agencies    13,547,154    14,797,040
Banks    22,283,842    18,597,206
Corporates    96,627,671    101,041,110
Consumers    149,998,911    159,282,337




Sub-total
   282,457,578    293,717,693




Financial assets at FVTPL^(*)
Deposit    26,935    27,901
Debt securities    1,824,155    2,337,085
Loans    385,450    212,473
Derivative assets    2,026,079    2,921,903




Sub-total
   4,262,619    5,499,362




Financial assets at FVTOCI
Debt securities    17,112,249    26,795,161
Securities at amortized cost
Debt securities    22,932,559    20,320,539
Derivative assets
Derivative assets (Designated for hedging)    35,503    121,131
Off-balance accounts
Guarantees    12,666,417    12,618,917
Unused loan commitments    97,796,704    103,651,674




Sub-total
   110,463,121    116,270,591




Total
   437,263,629    462,724,477




(*)
Puttable financial instruments are not included
a) Credit risk exposure by geographical areas
The following tables analyze credit risk exposure by geographical areas (Unit: Korean Won in millions):

December 31, 2016
Korea China USA UK Japan Others^(*) Total
Loans and receivables
241,380,250 4,286,018 2,792,088 895,874 323,470 8,714,933 258,392,633
Financial assets at FVTPL
5,205,849 6,525 — 261,547 81 99,737 5,573,739
AFS debt securities
16,155,290 13,845 137,861 — — 234,892 16,541,888
HTM securities
13,758,863 — 20,336 — — 131,052 13,910,251
Derivative assets for hedging
74,166 — — 66,342 — 69 140,577
Off-balance sheet items
96,245,092 737,513 103,130 80,831 23,250 1,367,464 98,557,280

Total
372,819,510 5,043,901 3,053,415 1,304,594 346,801 10,548,147 393,116,368

December 31, 2017
Korea China USA UK Japan Others^(*) Total
Loans and receivables
250,678,479 4,104,912 2,823,247 1,094,988 381,890 8,022,688 267,106,204
Financial assets at FVTPL
5,551,870 2,937 — 148,955 — 92,012 5,795,774
AFS debt securities
12,407,602 52,259 151,131 — — 618,252 13,229,244
HTM securities
16,606,692 — 63,732 — — 78,872 16,749,296
Derivative assets for hedging
16,590 — — 42,682 — — 59,272
Off-balance sheet items
91,603,852 529,193 172,570 66,974 25,039 1,222,412 93,620,040

Total
376,865,085 4,689,301 3,210,680 1,353,599 406,929 10,034,236 396,559,830

December 31, 2018
Korea China USA UK Japan Others^(*) Total
Loans and other financial assets at amortized cost
261,547,407 4,592,153 4,597,119 1,526,532 893,354 9,301,013 282,457,578
Securities at amortized cost
22,757,048 —   70,578 —   —   104,933 22,932,559
Financial assets at FVTPL
4,261,110 1,243 —   —   266 —   4,262,619
Financial assets at FVTOCI
15,697,518 261,085 103,755 24,960 2,247 1,022,684 17,112,249
Derivative assets (Designated for hedging)
35,503 —   —   —   —   —   35,503
Off-balance accounts
107,632,858 801,978 343,323 136,727 35,000 1,513,235 110,463,121

Total
411,931,444 5,656,459 5,114,775 1,688,219 930,867 11,941,865 437,263,629

(*)
Others consist of financial assets in Indonesia, ~~Vietnam, Panama~~Hong Kong, Singapore, and ~~the European countries~~other countries.
December 31, 2019
Korea China USA UK Japan Others^(*) Total
Loans and other financial assets at amortized cost
268,316,454 5,108,144 5,077,666 1,844,374 1,172,209 12,198,846 293,717,693
Securities at amortized cost
20,104,604 —   66,747 —   —   149,188 20,320,539
Financial assets at FVTPL
5,488,229 10,409 —   —   724 —   5,499,362
Financial assets at FVTOCI
24,553,655 332,319 144,601 102,311 2 1,662,273 26,795,161
Derivative assets (Designated for hedging)
121,131 —   —   —   —   —   121,131
Off-balance accounts
112,602,603 1,211,857 387,795 78,850 46,662 1,942,824 116,270,591

Total
431,186,676 6,662,729 5,676,809 2,025,535 1,219,597 15,953,131 462,724,477

(*)
Others consist of financial assets in Indonesia, Hong Kong, Singapore, and ~~others.~~other countries.
b) Credit risk exposure by industries
The following tables analyze credit risk exposure by industries, which are service, manufacturing, finance and insurance, construction, individuals and others in accordance with the Korea Standard Industrial Classification Code (Unit: Korean Won in millions):

December 31, 2016
Service Manufacturing Finance and
insurance Construction Individuals Others Total
Loans and receivables
46,040,278 35,652,974 37,711,983 3,789,670 125,558,637 9,639,091 258,392,633
Financial assets at FVTPL
77,198 360,881 4,093,567 24,140 993 1,016,960 5,573,739
AFS debt securities
1,092,279 57,781 9,568,151 63,166 — 5,760,511 16,541,888
HTM securities
1,673,971 — 8,290,451 251,599 — 3,694,230 13,910,251
Derivative assets for hedging
— — 140,577 — — — 140,577
Off-balance sheet items
18,423,611 26,878,320 9,927,574 4,621,971 33,603,651 5,102,153 98,557,280

Total
67,307,337 62,949,956 69,732,303 8,750,546 159,163,281 25,212,945 393,116,368

December 31, 2018
Service Manufacturing Finance and
insurance Construction Individuals Others Total
Loans and other financial assets at amortized cost
48,319,987 34,972,072 40,338,823 3,295,967 145,715,074 9,815,655 282,457,578
Securities at amortized cost
1,157,512 — 13,414,743 527,847 — 7,832,457 22,932,559
Financial assets at FVTPL
120,659 153,159 3,117,845 16,118 7,614 847,224 4,262,619
Financial assets at FVTOCI
382,409 109,749 13,017,646 224,665 5,535 3,372,245 17,112,249
Derivative assets (Designated for hedging)
— — 35,503 — — — 35,503
Off-balance accounts
17,645,104 22,300,388 9,654,685 4,146,708 49,948,865 6,767,371 110,463,121

Total
67,625,671 57,535,368 79,579,245 8,211,305 195,677,088 28,634,952 437,263,629

December 31, 2017
Service Manufacturing Finance and
insurance Construction Individuals Others Total
Loans and receivables
47,192,641 34,502,509 38,260,051 3,574,746 133,094,287 10,481,970 267,106,204
Financial assets at FVTPL
100,766 83,239 4,640,068 15,073 1,040 955,588 5,795,774
AFS debt securities
707,737 37,719 7,331,774 153,534 — 4,998,480 13,229,244
HTM securities
1,348,754 — 10,962,149 296,214 — 4,142,179 16,749,296
Derivative assets for hedging
— — 59,272 — — — 59,272
Off-balance sheet items
16,892,926 21,427,378 9,841,379 3,842,479 36,928,554 4,687,324 93,620,040

Total
66,242,824 56,050,845 71,094,693 7,882,046 170,023,881 25,265,541 396,559,830

December 31, 2019
Service Manufacturing Finance and
insurance Construction Individuals Others Total
Loans and other financial assets at amortized cost
51,233,088 32,983,972 36,141,770 3,291,001 155,120,055 14,947,807 293,717,693
Securities at amortized cost
8,545,838 — 10,979,001 364,591 — 431,109 20,320,539
Financial assets at FVTPL
162,780 128,666 4,084,698 39,193 15,430 1,068,595 5,499,362
Financial assets at FVTOCI
85,609 139,098 18,968,456 10,047 9,241 7,582,710 26,795,161
Derivative assets (Designated for hedging)
— — 121,131 — — — 121,131
Off-balance accounts
17,813,366 23,841,881 10,015,897 4,161,139 53,335,209 7,103,099 116,270,591

Total
77,840,681 57,093,617 80,310,953 7,865,971 208,479,935 31,133,320 462,724,477

3) Credit risk ~~of loans~~exposure
a) Financial assets
The maximum exposure to credit risk by asset quality, except for financial assets at FVTPL and ~~receivables~~derivative asset (Designated for hedging) is as follows (Unit: Korean Won in millions):
December 31, 2018
Stage 1 Stage 2 Stage 3 Total Loss
allowance Total, net
Above
appropriate
credit
rating^(*1) Less than a
limited
credit rating^(*3) Above
appropriate
credit
rating^(*2) Less than a
limited credit
rating^(*3)
Loans and other financial assets at amortized cost
252,921,186 17,624,416 6,330,382 5,739,850 1,693,148 284,308,982 (1,851,404 ) 282,457,578
Korean treasury and government agencies
13,549,305 1,009 1 —   —   13,550,315 (3,161 ) 13,547,154
Banks
22,163,951 105,583 27,777 —   14,307 22,311,618 (27,776 ) 22,283,842
Corporates
77,160,502 15,550,301 655,907 3,424,215 1,034,030 97,824,955 (1,197,284 ) 96,627,671
General business
43,173,952 6,474,057 526,303 1,723,704 716,722 52,614,738 (817,002 ) 51,797,736
Small- andmedium-sized enterprise
29,510,917 8,527,542 107,998 1,547,761 277,825 39,972,043 (335,469 ) 39,636,574
Project financing and others
4,475,633 548,702 21,606 152,750 39,483 5,238,174 (44,813 ) 5,193,361
Consumers
140,047,428 1,967,523 5,646,697 2,315,635 644,811 150,622,094 (623,183 ) 149,998,911
Securities at amortized cost
22,939,039 —   195 —   250 22,939,484 (6,925 ) 22,932,559
Financial assets at FVTOCI^(*4)
16,940,654 146,442 25,153 —   —   17,112,249 (6,177 ) 17,112,249

Total
292,800,879 17,770,858 6,355,730 5,739,850 1,693,398 324,360,715 (1,864,506 ) 322,502,386

   December 31, 2018
   Collateral value
   Stage1    Stage2    Stage3    Total
Loans and other financial assets at amortized cost
   163,329,105    8,836,440    698,593    172,864,138
Korean treasury and government agencies
   11,600    —      —      11,600
Banks
   361,024    3,334    —      364,358
Corporates
   51,595,949    2,509,620    426,325    54,531,894
General business
   19,907,948    1,167,993    241,651    21,317,592
Small- andmedium-sized enterprise
   29,780,716    1,291,222    184,674    31,256,612
Project financing and others
   1,907,285    50,405    —      1,957,690
Consumers
   111,360,532    6,323,486    272,268    117,956,286
Securities at amortized cost
   —      —      —      —
Financial assets at FVTOCI^(*4)
   —      —      —      —








Total
   163,329,105    8,836,440    698,593    172,864,138








(*1)
Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
(*2)
Credit grade of corporates areA- ~ BBB, and consumers are grades 1 ~ 6.
(*3)
Credit grade of corporates areBBB- ~ C, and consumers are grades 7 ~ 10.
(*4)
Financial assets at FVTOCI has been disclosed as the amount before deducting loss allowance because loss allowance does not reduce the carrying amount.
December 31, 2019
Stage 1 Stage 2 Stage 3 Total Loss
allowance Total, net
Above
appropriate
credit
rating^(*1) Less than a
limited
credit rating^(*3) Above
appropriate
credit
rating^(*2) Less than a
limited credit
rating^(*3)
Loans and other financial assets at amortized cost
255,709,205 19,823,451 8,712,860 9,625,024 1,504,172 295,374,712 (1,657,019 ) 293,717,693
Korean treasury and government agencies
14,789,933 10,390 —   —   1 14,800,324 (3,284 ) 14,797,040
Banks
18,336,664 109,667 150,318 —   21,907 18,618,556 (21,350 ) 18,597,206
Corporates
82,286,304 15,201,687 485,469 3,267,311 792,375 102,033,146 (992,036 ) 101,041,110
General business
45,769,233 6,191,625 441,089 1,620,761 544,238 54,566,946 (678,237 ) 53,888,709
Small- andmedium-sized enterprise
32,180,551 8,507,800 44,380 1,586,865 230,901 42,550,497 (287,027 ) 42,263,470
Project financing and others
4,336,520 502,262 —   59,685 17,236 4,915,703 (26,772 ) 4,888,931
Consumers
140,296,304 4,501,707 8,077,073 6,357,713 689,889 159,922,686 (640,349 ) 159,282,337
Securities at amortized cost
20,326,050 —   —   —   —   20,326,050 (5,511 ) 20,320,539
Financial assets at FVTOCI^(*4)
26,684,601 110,560 —   —   —   26,795,161 (8,569 ) 26,795,161

Total
302,719,856 19,934,011 8,712,860 9,625,024 1,504,172 342,495,923 (1,671,099 ) 340,833,393

   December 31, 2019
   Collateral value
   Stage1    Stage2    Stage3    Total
Loans and other financial assets at amortized cost
   169,438,539    14,451,806    692,139    184,582,484
Korean treasury and government agencies
   —      —      —      —
Banks
   612,200    2,028    —      614,228
Corporates
   55,602,818    2,335,496    394,860    58,333,174
General business
   22,291,348    1,023,766    240,771    23,555,885
Small- andmedium-sized enterprise
   31,517,538    1,311,730    145,061    32,974,329
Project financing and others
   1,793,932    —      9,028    1,802,960
Consumers
   113,223,521    12,114,282    297,279    125,635,082
Securities at amortized cost
   —      —      —      —
Financial assets at FVTOCI^(*4)
   —      —      —      —








Total
   169,438,539    14,451,806    692,139    184,582,484








(*1)
Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
(*2)
Credit grade of corporates areA- ~ BBB, and consumers are grades 1 ~ 6.
(*3)
Credit grade of corporates areBBB- ~ C, and consumers are grades 7 ~ 10.
(*4)
Financial assets at FVTOCI has been disclosed as the amount before deducting loss allowance because loss allowance does not reduce the carrying amount.
b) Guarantees and loan commitments
The credit ~~exposure~~quality of ~~loans and receivables by customer~~the guarantees and loan ~~classification~~commitments as of December 31, 2018 and 2019 are as follows (Unit: Korean Won in millions):

December 31, 2016
Corporates
Korean
treasury and
government
agencies Banks General
business Small and
medium sized
enterprise Project
financing
and others Sub-total Consumers Total
Loans and receivables neither overdue nor impaired
16,062,399 20,258,860 49,815,352 31,520,617 7,142,440 88,478,409 132,195,005 256,994,673
Loans and receivables overdue but not impaired
— — 48,294 57,245 — 105,539 765,829 871,368
Impaired loans and receivables
— — 1,404,568 429,955 208,372 2,042,895 510,793 2,553,688

Gross loans and receivables
16,062,399 20,258,860 51,268,214 32,007,817 7,350,812 90,626,843 133,471,627 260,419,729

Allowance for credit losses
4,094 16,600 1,156,000 424,142 61,135 1,641,277 365,125 2,027,096

Total, net
16,058,305 20,242,260 50,112,214 31,583,675 7,289,677 88,985,566 133,106,502 258,392,633

December 31, 2017
Corporates
Korean
treasury and
government
agencies Banks General
business Small and
medium sized
enterprise Project
financing
and others Sub-total Consumers Total
Loans and receivables neither overdue nor impaired
8,825,767 26,861,286 50,463,112 34,107,547 5,547,950 90,118,609 139,886,407 265,692,069
Loans and receivables overdue but not impaired
8 — 65,616 63,067 — 128,683 878,406 1,007,097
Impaired loans and receivables
— — 1,402,131 251,431 46,717 1,700,279 537,001 2,237,280

Gross loans and receivables
8,825,775 26,861,286 51,930,859 34,422,045 5,594,667 91,947,571 141,301,814 268,936,446

Allowance for credit losses
2,191 15,977 1,078,733 267,162 31,125 1,377,020 435,054 1,830,242

Total, net
8,823,584 26,845,309 50,852,126 34,154,883 5,563,542 90,570,551 140,866,760 267,106,204

~~a) Credit quality of loans and receivables~~
The Group manages credit quality of its loans and receivables, (neither overdue nor impaired, net of allowance) through an internal rating system. Segregation of credit quality is as follows (Unit: Korean Won in millions):

December 31, 2016
Corporates
Korean
treasury and
government
agencies Banks General
business Small and
medium sized
enterprise Project
financing
and others Sub-total Consumers Total
Upper grade^(*1)
16,058,288 20,242,260 41,461,420 18,755,963 5,337,033 65,554,416 128,374,017 230,228,981
Lower grade^(*2)
17 — 7,941,871 12,550,282 1,763,658 22,255,811 3,680,920 25,936,748

Total
16,058,305 20,242,260 49,403,291 31,306,245 7,100,691 87,810,227 132,054,937 256,165,729

Value of collateral^(*3)
— 358,456 18,003,674 25,493,006 3,996,162 47,492,842 111,054,910 158,906,208

December 31, 2017
Corporates
Korean
treasury and
government
agencies Banks General
business Small and
medium sized
enterprise Project
financing
and others Sub-total Consumers Total
Upper grade^(*1)
8,823,576 26,845,309 43,613,460 23,191,627 4,623,750 71,428,837 135,893,496 242,991,218
Lower grade^(*2)
— — 6,565,274 10,767,062 898,536 18,230,872 3,835,030 22,065,902

Total
8,823,576 26,845,309 50,178,734 33,958,689 5,522,286 89,659,709 139,728,526 265,057,120

Value of collateral^(*3)
1,409 483,469 19,868,185 29,600,362 2,642,674 52,111,221 114,441,637 167,037,736

December 31, 2018
Financial assets
Stage 1 Stage 2 Stage3 Total
Above
appropriate
credit rating^(*1) Less than a
limited credit
rating^(*3) Above
appropriate
credit rating^(*2) Less than a
limited credit
rating^(*3)
Off-balance accounts:

Guarantees
11,212,772 1,063,551 7,147 261,599 121,348 12,666,417
Loan commitments
91,734,567 3,632,586 1,529,330 880,518 19,703 97,796,704

Total
102,947,339 4,696,137 1,536,477 1,142,117 141,051 110,463,121

(*1) ~~AAA~~~
Credit grade of corporates are AAA ~ BBB, ~~for Corporates,~~ and ~~1~6 level for Consumers~~consumers are grades 1 ~ 6.
(*2)
Credit grade of corporates are~~BBB-~~A- ~~~C for Corporates,~~~ BBB, and ~~7~10 level for Consumers~~consumers are grades 1 ~ 6.
(*3) ~~The value~~
Credit grade of ~~collateral held is the recoverable amount when calculating the allowance for credit losses.~~corporate areBBB- ~ C, and consumers are grades 7 ~ 10.
   December 31, 2019
Financial assets
   Stage 1    Stage 2    Stage3    Total
   Above
appropriate
credit rating^(*1)    Less than a
limited credit
rating^(*3)    Above
appropriate
credit rating^(*2)    Less than a
limited credit
rating^(*3)
Off-balance accounts:

Guarantees
   10,952,917    1,333,561    355    223,657    108,427    12,618,917
Loan Commitments
   97,854,790    3,479,295    1,388,136    906,033    23,420    103,651,674












Total
   108,807,707    4,812,856    1,388,491    1,129,690    131,847    116,270,591












(*1)
Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.
(*2)
Credit grade of corporates areA- ~ BBB, and consumers are grades 1 ~ 6.
(*3)
Credit grade of corporate areBBB- ~ C, and consumers are grades 7 ~ 10
~~The total amount~~4) Collateral and other credit enhancements
During the current period, there have been no significant changes in the ~~above table~~value of collateral or other credit enhancements held by the Group and there have been no significant changes in collateral or other credit enhancements due to changes in the collateral policy of the Group. As of December 31, 2019, there are ~~net of allowances~~no financial assets that do not recognize the allowance for losses just because financial assets have collateral.
5) For the financial assets that record loss allowance as total expected credit ~~losses, for loans and receivables neither overdue nor impaired, amounting to 828,944~~loss, the amortized cost before the change in contractual cash flows is 18,735 million Won, and ~~634,949~~the net loss due to the change is 82 million ~~Won~~Won.
6) As the Group manages receivables that have not lost the right of claim to the debtor for the grounds of incomplete statute limitation and uncollected receivables under the related laws as receivable charge-offs, the balance as of December 31, ~~2016~~2018 and ~~2017, respectively.~~
~~b) Aging analysis of loans and receivables~~
~~Aging analysis of loans and receivables (overdue but not impaired, net of allowance) is as follows (Unit: Korean Won in millions):~~

   December 31, 2016
Past due
   Korean
treasury and
government
agencies    Banks    Corporates    Consumers    Total
         General
business    Small &
medium sized
enterprise    Project
financing
and others    Sub-total
Less than 30 days
   —    —    45,255    41,329    —    86,584    584,995    671,579
30 to 59 days
   —    —    1,553    8,933    —    10,486    90,296    100,782
60 to 89 days
   —    —    337    2,123    —    2,460    49,151    51,611
















Total
   —    —    47,145    52,385    —    99,530    724,442    823,972
















Value of collateral^(*)
   —    —    7,021    45,304    —    52,325    546,164    598,489
















   December 31, 2017
Past due
   Korean
treasury and
government
agencies    Banks    Corporates    Consumers    Total
         General
business    Small &
medium sized
enterprise    Project
financing
and others    Sub-total
Less than 30 days
   8    —    59,560    48,002    —    107,562    683,445 �� 791,015
30 to 59 days
   —    —    3,702    6,550    —    10,252    94,376    104,628
60 to 89 days
   —    —    928    4,935    —    5,863    55,011    60,874
















Total
   8    —    64,190    59,487    —    123,677    832,832    956,517
















Value of collateral^(*)
   —    —    4,619    46,513    —    51,132    619,867    670,999
















~~(*)~~ ~~The value of collateral held is the recoverable amount used when calculating allowance for credit losses.~~
~~The total amounts in the above table~~2019 are ~~net of allowances for credit losses, for loans and receivables that are overdue but not impaired, amounting to 47,396~~9,578,796 million Won and ~~50,580~~9,667,169 million ~~Won as of December 31, 2016 and 2017, respectively.~~Won.
~~c) Impaired loans and receivables~~
~~Impaired loans and receivables, net of allowance are as follows (Unit: Korean Won in millions):~~

December 31, 2016
Korean
treasury and
government
agencies Banks Corporates Consumers Total
General
business Small &
medium sized
enterprise Project
financing
and others Sub-total
Impaired loans
— — 661,778 225,045 188,986 1,075,809 327,123 1,402,932
Value of collateral^(*)
— — 482,680 236,954 42,166 761,800 250,583 1,012,383

December 31, 2017
Korean
treasury and
government
agencies Banks Corporates Consumers Total
General
business Small &
medium sized
enterprise Project
financing
and others Sub-total
Impaired loans
— — 609,202 136,707 41,256 787,165 305,402 1,092,567
Value of collateral^(*)
— — 562,638 141,026 20,351 724,015 227,966 951,981
~~(*)~~ ~~The value of collateral held is the recoverable amount used when calculating allowance for credit losses.~~
The total amounts in the above table are net of allowances for credit losses, for impaired loans and receivables amounting to 1,150,756 million Won and 1,144,713 million Won as of December 31, 2016 and 2017, respectively.
~~4) Credit risk of debt securities~~
The Group manages debt securities based on the credit rating. Credit soundness of debt securities on the basis of External Credit Assessment Institution (“ECAI”), Korea’s qualified external rating agency, is as follows (Unit: Korean Won in millions):

   December 31, 2016
   Financial
assets at
FVTPL^(*)    AFS debt
securities    HTM
securities    Total
AAA
   1,658,332    12,490,934    13,342,384    27,491,650
AA- ~ AA+
   720,535    3,372,310    466,401    4,559,246
BBB- ~ A+
   266,049    618,736    101,466    986,251
Below BBB-
   4,348    59,908    —    64,256








Total
   2,649,264    16,541,888    13,910,251    33,101,403








   December 31, 2017
   Financial
assets at
FVTPL^(*)    AFS debt
securities    HTM
securities    Total
AAA
   1,685,099    9,897,689    15,806,327    27,389,115
AA- ~ AA+
   722,923    2,386,567    888,547    3,998,037
BBB- ~ A+
   236,311    876,482    52,188    1,164,981
Below BBB-
   9,694    68,506    2,234    80,434








Total
   2,654,027    13,229,244    16,749,296    32,632,567








~~(*)~~ ~~Financial assets at FVTPL comprise debt securities held for trading and financial assets designated at FVTPL.~~
(2)    Market risk
Market risk is the possible risk of loss arising from trading ~~activities~~position andnon-trading ~~activities in~~position as a result of the volatility of market factors such as interest rates, stock prices and foreign exchange rates.
Market risk occurs as a result of changes in the interest rates and foreign exchange rates for financial instruments that are not yet settled, and all contracts are exposed to a certain level of volatility according to changes in the interest rates, credit spreads, foreign exchange rates and the price of equity securities.
1) Market risk management
~~For trading activities~~Market risk management refers to the process of making and~~non-trading~~ ~~activities,~~ implementing decisions for the ~~Group avoids, bears,~~avoidance, acceptance or ~~mitigates~~mitigation of risks by identifying the underlying source of the risks and measuring ~~parameters~~its level, and evaluating ~~their appropriateness.~~
At the beginning of each year, the Risk Management Committee establishes a Value at Risk (“VaR”, maximum losses) limit, loss limit and risk capital limit by subsidiaries for its management purposes. The limit by investment desk/dealer is independently managed to the extentappropriateness of the ~~limit given to subsidiaries and the limit by investment and loss cut is managed by the risk management personnel with department.~~level of accepted market risks.
a) Trading activities
The Group uses both a standard-based and an internal model-based approach to measure market risk. The standard-based approach is used to calculate individual market risk of ~~required~~owned capital while the internal model-based approach is used to calculate general capital market risk and itmanaging internal risk. The Value at Risk (VaR) methodology is used to manage and measure market risk.
Woori Bank, a subsidiary of the Group, uses the internal ~~risk management measure. For~~model approved by the ~~trading activities, the Risk Management department measures~~Financial Supervisory Service to measure the VaR using the Historical Simulation Method based on a 99% confidence level and a10-day retention period, and calculates the required capital risk for calculating the BIS ratio. For internal management purposes, limit ~~by department, risk factor and loss limit~~management is performed on a daily basis ~~and reports regularly to the Risk Management Committee.~~
~~2) Sensitivity analysis of market risk~~
~~The Group performs the sensitivity analyses both for trading and fornon-trading~~ ~~activities.~~
~~For the trading activities, the Group uses a~~measuring VaR model that uses certain assumptions of possible fluctuations in market conditions and, by conducting simulations of gains and losses, under which the model estimates the maximum losses that may occur. A VaR model predicts based on ~~statistics of possible losses on~~a 99% confidence and 1 day retention period. In addition, Woori Bank perform a daily verification that compares VaR measurement and profit and loss to verify the portfolio at a certain period currently or in the future. It indicates the maximum expected loss with at least 99% credibility. In short, there exists a one percent possibility that the actual loss might exceed the predicted loss generated from the VaR calculation. The actual results are periodically monitored to examine the validitysuitability of the ~~assumptions and variables and factors that are used in VaR calculations. However, this approach cannot prevent the loss when the market fluctuation exceeds expectation.~~
~~For thenon-trading~~ activities, interest rate Earning at Risk (“EaR”) and interest rate VaR, which is based on the simulations of the Net Interest Income (“NII”) and Net Present Value (“NPV”), are calculated for the Bank, and the risks for all other subsidiaries are measured and managed by the interest rate EaR and the interest rate VaR calculations based on the Bank for International Settlements (“BIS”) Framework.
NII is a profit based indicator for displaying profit changes in the short term due to short term interest changes. It will be estimated as subtracting interest expenses of liabilities from the interest income of assets. NPV is an indicator for displaying risks in economic view according to unfavorable changes related to interest rate. It will be estimated as subtracting the present value of liabilities from the present value of assets.
EaR shows the maximum profit-loss amount, which indicates the maximum deduction amount caused by the unfavorable changes related to the interest rate of a certain period (i.e. 1 year). Interest rate VaR shows the potential maximum loss generated by the unfavorable changes during a certain period of time in the present or future.
~~a) Trading activities~~model.
The minimum, maximum and average VaR of the Group for the year ended December 31, ~~2016~~2018 and ~~2017,~~2019, respectively, and the VaR of the Group as of December 31, ~~2016~~2018 and ~~2017,~~2019, respectively, are as follows (Unit: Korean Won in millions):

   As of
December 31,
2016 For the year ended
December 31, 2016 As of
December 31,
2017 For the year ended
December 31, 2017 December 31,
2018 For the year ended
December 31, 2018 December 31,
2019 For the year ended
December 31, 2019
Risk factor
   Average Maximum Minimum Average Maximum Minimum Average Maximum Minimum Average Maximum Minimum
Interest rate
   3,250 2,844 6,430 1,367 4,183 3,799 4,918 2,467 3,107 3,702 5,528 1,730 5,052 3,406 5,725 1,176
Stock price
   4,191 3,456 5,063 2,304 909 2,863 4,419 909 2,353 2,669 5,081 1,138 3,730 3,203 5,935 1,146
Foreign currencies
   4,396 4,914 7,686 3,967 4,750 5,051 6,636 4,061 4,972 4,678 6,136 3,439 5,028 5,033 6,469 4,395
Commodity price
   152 113 325 21 — 31 188 — —   3 24 —   —   1 32 —
Diversification
   (5,630 ) (5,355 ) (10,385 ) (4,034 ) (4,472 ) (4,621 ) (6,798 ) (2,067 ) (4,445 ) (4,869 ) (8,155 ) (1,815 ) (6,233 ) (5,127 ) (9,229 ) (2,339 )


Total VaR^(*)
   6,359 5,972 9,119 3,625 5,370 7,123 9,363 5,370 5,987 6,183 8,614 4,492 7,577 6,516 8,932 4,378


(*) ~~VaR= Value~~
VaR (Value at ~~Risk~~Risk): Retention period of 1 day, Maximum expected losses under 99% level of confidence.
b)Non-trading activities
Fornon-trading sectors of the Bank, consolidated trusts and subsidiaries of the Bank, the risk is managed and measured byDNII (change in Net Interest Income) andDEVE (change in Economic Value of Equity) through NII (Net Interest Income) and NPV (Net Present Value) simulation, and for the remaining subsidiaries, the risk is managed and measured with interest rate EaR(Earning at Risk, maximum of the expected change for profit or loss) and interest rate VaR that are in accordance with BIS Framework.
NII is primarily an indicator of changes in profit from short-term changes in interest rates and is measured by deducting the interest expenses on the liability from the interest income from the asset. NPV is primarily an indicator of the risk of an economic value perspective resulting from unfavorable changes in interest rates and is measured by subtracting the present value of the liability from the present value of the asset.DNII represents a change in net interest income that may occur over a certain period (e.g., 1 year) due to unfavorable changes in interest rates, andDEVE indicates the economic value changes in equity capital that could be caused by changes in interest rates affecting the present value of asset, liabilities, and others. The interest rate EaR represents the maximum amount of decrease in net interest income that could result from unfavorable changes in interest rate over a certain period (e.g., 1 year), and the interest rate VaR represents the maximum expected loss that indicates how much net asset value can decrease at present or in the future due to unfavorable changes in interest rates.
The NII and NPV are calculated for the assets and liabilities owned by the Bank and consolidated trusts, respectively, by using the simulation method. The scenario responding to interest rate (“IR”) changes as of December 31, 2018 are as follows (Unit: Korean Won in millions):

Name of scenario
   December 31, 2016    December 31, 2017
NII^(*1)    NPV^(*2)    NII^(*1)    NPV^(*2)
   December 31, 2018
NII^(*1)    NPV^(*2)
Base case
   4,367,411    21,556,632    4,916,138    23,472,792    4,895,332    24,636,678
Base case (Prepay)
   4,384,783    20,666,425    4,916,015    23,163,942    4,887,799    24,225,946
IR 100bp up
   4,802,118    20,893,490    5,361,546    22,886,122    5,575,470    24,415,761
IR 100bp down
   3,903,129    22,279,204    4,386,437    24,127,559    4,329,543    24,907,344
IR 200bp up
   5,236,879    20,289,742    5,806,723    22,372,208    6,603,132    24,232,738
IR 200bp down
   2,975,351    23,052,848    3,452,590    24,830,482    3,508,859    25,245,667
IR 300bp up
   5,671,639    19,742,627    6,251,897    21,929,189    7,560,155    24,079,415
IR 300bp down
   1,968,273    25,096,193    2,254,609    26,633,807    3,352,267    25,680,084

(*1)
NII: Net Interest Income
(*2)
NPV: Net Portfolio Value
~~The interest EaR~~For assets and ~~VaR are~~liabilities as of December 31, 2019 that include bank, consolidated trusts and subsidiaries of the bank, details ofDEVE andDNII calculated based on ~~the BIS Framework of other subsidiaries excluding the Bank~~interest rate risk in banking book (IRRBB) are as follows (Unit: Korean Won in millions):

December 31, 2016

December 31, 2017
EaR

VaR

EaR

VaR
188,381
   110,335    255,679    130,821
December 31, 2019
DEVE^(*1)

DNII^(*2)
490,981
   162,023
(*1)
DEVE: change in Economic Value of Equity
(*2)
DNII: change in Net Interest Income
For the subsidiaries other than the bank and consolidated trusts as of December 31, 2018, and for the remaining subsidiaries except the bank, consolidated trusts, and consolidated subsidiaries of the bank as of December 31, 2019, the interest rate EaR and VaR calculated based on the BIS Framework are as follows (Unit: Korean Won in millions):
December 31, 2018

December 31, 2019
EaR^(*1)

VaR^(*2)

EaR^(*1)

VaR^(*2)
248,364
   141,484    92,439    87,872
(*1)
EaR(Earning at Risk): Change of Maximum expected income and expense
(*2)
VaR(Value at Risk): Maximum expected losses
The Group estimates and manages risks related to changes in interest rate due to the difference in the maturities of interest-bearing assets and ~~the~~ liabilities and discrepancies in the terms of interest ~~rate.~~rates. Cash flows of(both principal ~~amounts~~ and ~~interests from~~interest), interest bearing assets and liabilities, presented by eachre-pricing date, are as follows (Unit: Korean Won in millions):

December 31, 2016 December 31, 2018
Within 3
months 4 to 6
months 7 to 9
months 10 to12
months 1 to 5
years Over 5 years Total Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years Over 5
years Total
Asset:

Loans and receivables
148,237,350 42,032,667 8,064,502 7,757,087 55,838,192 35,245,734 297,175,532
AFS financial assets
3,165,094 2,946,992 2,854,514 2,915,226 5,029,918 713,596 17,625,340
HTM financial assets
2,770,079 1,515,213 1,246,503 1,143,170 6,853,951 892,030 14,420,946
Loans and other financial assets at amortized cost
159,894,065 45,387,214 8,878,060 9,903,959 46,459,450 4,201,379 274,724,127
Financial assets at FVTPL
371,984 32,278 24,951 64,838 145,121 27,536 666,708
Financial assets at FVTOCI
2,579,442 1,775,435 1,486,953 2,223,494 9,289,742 185,320 17,540,386
Securities at amortized cost
2,449,416 2,251,180 1,735,698 1,946,948 15,177,608 402,671 23,963,521

Total
154,172,523 46,494,872 12,165,519 11,815,483 67,722,061 36,851,360 329,221,818 165,294,907 49,446,107 12,125,662 14,139,239 71,071,921 4,816,906 316,894,742

Liability:

Deposits due to customers
100,051,821 36,614,529 25,028,378 25,017,836 34,513,004 40,737 221,266,305 100,232,916 44,207,416 29,419,951 35,427,657 40,130,055 72,276 249,490,271
Borrowings
13,772,710 1,044,748 491,330 368,431 2,816,565 421,677 18,915,461 9,971,680 1,924,390 670,404 518,167 2,723,156 626,364 16,434,161
Debentures
2,109,235 2,077,681 860,455 1,545,943 14,613,799 4,143,773 25,350,886 2,153,916 2,416,483 2,201,070 2,584,230 18,955,400 2,403,077 30,714,176

Total
115,933,766 39,736,958 26,380,163 26,932,210 51,943,368 4,606,187 265,532,652 112,358,512 48,548,289 32,291,425 38,530,054 61,808,611 3,101,717 296,638,608

December 31, 2017
Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years Over 5 years Total
Asset:

Loans and receivables
161,653,892 41,671,530 7,614,159 6,411,841 54,150,998 26,272,958 297,775,378
AFS financial assets
2,150,708 2,500,103 2,016,711 2,367,762 4,229,000 601,735 13,866,019
HTM financial assets
2,286,179 2,161,467 1,433,425 1,687,362 9,369,794 345,868 17,284,095

Total
166,090,779 46,333,100 11,064,295 10,466,965 67,749,792 27,220,561 328,925,492

Liability:

Deposits due to customers
106,815,564 37,750,367 25,117,556 27,585,458 37,518,878 91,246 234,879,069
Borrowings
9,865,249 1,056,579 412,966 437,431 2,709,010 479,827 14,961,062
Debentures
1,955,902 2,452,240 1,018,563 1,752,847 19,770,538 2,869,766 29,819,856

Total
118,636,715 41,259,186 26,549,085 29,775,736 59,998,426 3,440,839 279,659,987

December 31, 2019
Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years Over 5
years Total
Asset:

Loans and other financial assets at amortized cost
153,023,603 49,505,606 12,505,250 10,506,470 57,582,270 5,209,670 288,332,869
Financial assets at FVTPL
150,149 23,648 63,825 34,299 131,206 13,347 416,474
Financial assets at FVTOCI
5,414,586 5,486,113 3,450,669 3,174,893 9,367,756 318,371 27,212,388
Securities at amortized cost
1,844,868 1,696,004 738,383 1,409,549 14,869,227 858,142 21,416,173

Total
160,433,206 56,711,371 16,758,127 15,125,211 81,950,459 6,399,530 337,377,904

Liability:

Deposits due to customers
116,490,812 45,803,202 32,683,132 26,740,013 43,175,232 59,305 264,951,696
Borrowings
12,105,234 1,910,759 1,048,991 706,952 3,264,861 509,359 �� 19,546,156
Debentures
2,378,211 2,894,577 3,330,658 2,466,142 19,211,409 2,537,391 32,818,388

Total
130,974,257 50,608,538 37,062,781 29,913,107 65,651,502 3,106,055 317,316,240

3)(3) Currency risk
Currency risk arises from ~~monetary~~the financial instruments denominated in foreign currencies other than the functional currency. Therefore, no currency risk arises fromnon-monetary items or financial instruments denominated in the functional currency.
Financial instruments in foreign currencies exposed to currency risk are as follows (Unit: USD in millions, JPY in millions, CNY in millions, EUR in millions, and Korean Won in millions):

December 31, 2016 December 31, 2018
USD JPY CNY EUR Others Total USD JPY CNY EUR Others Total
Foreign
currency Won
equivalent Foreign
currency Won
equivalent Foreign
currency Won
equivalent Foreign
currency Won
equivalent Won
equivalent Won
equivalent Foreign
currency Korean
Won
equivalent Foreign
currency Korean
Won
equivalent Foreign
currency Korean
Won
equivalent Foreign
currency Korean
Won
equivalent Korean
Won
equivalent Korean
Won
equivalent
Asset:

Loans and receivables
22,868 27,635,970 108,944 1,129,539 23,194 4,018,678 1,548 1,962,856 4,382,990 39,130,033
Asset

Loans and other financial assets at amortized cost
20,406 22,816,027 167,419 1,696,255 29,880 4,863,230 1,994 2,550,147 4,742,340 36,667,999
Financial assets at FVTPL
66 79,386 57 589 — — 30 37,562 34,124 151,661 74 82,197 1,425 14,434 — — 59 75,169 79,584 251,384
AFS financial assets
898 1,085,108 — — 80 13,844 — 570 144,799 1,244,321
HTM financial assets
17 20,517 — — — — — — 143,535 164,052
Financial assets at FVTOCI
1,472 1,645,595 — — 1,604 261,085 — — 729,581 2,636,261
Securities at amortized cost
52 58,489 — — — — — — 175,552 234,041

Total
23,849 28,820,981 109,001 1,130,128 23,274 4,032,522 1,578 2,000,988 4,705,448 40,690,067 22,004 24,602,308 168,844 1,710,689 31,484 5,124,315 2,053 2,625,316 5,727,057 39,789,685

December 31, 2016

USD JPY CNY EUR Others Total
Foreign
currency Won
equivalent Foreign
currency Won
equivalent Foreign
currency Won
equivalent Foreign
currency Won
equivalent Won
equivalent Won
equivalent
Liability:

Liability
Liability

Financial liabilities at FVTPL
75 90,908 253 2,621 — — 88 111,098 115,980 320,607 118 131,927 1,956 19,815 — — 55 70,250 121,658 343,650
Deposits due to customers
11,294 13,648,729 124,790 1,293,835 18,950 3,283,291 651 825,165 2,402,076 21,453,096 11,159 12,477,154 169,770 1,720,072 23,967 3,900,923 887 1,135,149 4,392,936 23,626,234
Borrowings
7,193 8,692,792 3,243 33,625 — — 222 280,894 115,332 9,122,643 6,606 7,386,616 3,834 38,847 381 61,947 286 365,585 505,541 8,358,536
Debentures
2,931 3,541,769 — — 700 121,282 — — 228,720 3,891,771 3,645 4,075,084 — — — — — — 285,339 4,360,423
Other financial liabilities
2,235 2,700,703 12,390 128,464 1,508 261,278 245 310,396 846,990 4,247,831 2,522 2,820,290 28,955 293,362 1,818 295,919 193 246,584 18,527 3,674,682

Total
23,728 28,674,901 140,676 1,458,545 21,158 3,665,851 1,206 1,527,553 3,709,098 39,035,948 24,050 26,891,071 204,515 2,072,096 26,166 4,258,789 1,421 1,817,568 5,324,001 40,363,525

Off-balance accounts
8,593 10,384,163 28,675 297,304 1,061 183,883 374 473,845 312,187 11,651,382 7,453 8,333,153 33,347 337,868 1,557 253,366 474 606,714 823,655 10,354,756

December 31, 2017

USD JPY CNY EUR Others Total
Foreign
currency Won
equivalent Foreign
currency Won
equivalent Foreign
currency Won
equivalent Foreign
currency Won
equivalent Won
equivalent Won
equivalent
Asset:

Loans and receivables
23,000 24,642,900 126,944 1,204,843 25,224 4,127,936 1,156 1,479,351 3,937,733 35,392,763
Financial assets at FVTPL
32 34,303 25 238 — — 27 34,583 104,892 174,016
AFS financial assets
1,966 2,105,972 — — 319 52,259 — 590 302,801 2,461,622
HTM financial assets
111 118,868 — — — — — — 78,175 197,043

Total
25,109 26,902,043 126,969 1,205,081 25,543 4,180,195 1,183 1,514,524 4,423,601 38,225,444

December 31, 2019
USD JPY CNY EUR Others Total
Foreign
currency Korean
Won
equivalent Foreign
currency Korean
Won
equivalent Foreign
currency Korean
Won
equivalent Foreign
currency Korean
Won
equivalent Korean
Won
equivalent Korean
Won
equivalent
Asset

Loans and other financial assets at amortized cost
22,916 26,531,794 150,462 1,600,140 31,393 5,203,131 2,258 2,929,312 5,272,352 41,536,729
Financial assets at FVTPL
165 190,733 5,322 56,602 25 4,155 105 135,827 64,185 451,502
Financial assets at FVTOCI
2,679 3,102,752 — — 2,005 332,319 25 33,017 406,753 3,874,841
Securities at amortized cost
319 369,677 — — — — 40 52,139 97,092 518,908

Total
26,079 30,194,956 155,784 1,656,742 33,423 5,539,605 2,428 3,150,295 5,840,382 46,381,980

Liability

Financial liabilities at FVTPL
251 291,102 4,415 46,957 — — 68 87,776 83,790 509,625
Deposits due to customers
13,208 15,291,671 166,108 1,766,526 27,739 4,597,467 1,727 2,240,884 3,247,164 27,143,712
Borrowings
6,588 7,627,665 11,061 117,634 16 2,743 515 668,060 499,046 8,915,148
Debentures
3,999 4,629,944 — — — — 105 136,230 271,790 5,037,964
Other financial liabilities
3,016 3,492,462 11,240 119,529 3,079 510,281 359 466,240 6,906 4,595,418

Total
27,062 31,332,844 192,824 2,050,646 30,834 5,110,491 2,774 3,599,190 4,108,696 46,201,867

Off-balance accounts
7,030 8,139,395 34,316 364,946 4,525 749,973 560 726,323 634,870 10,615,507

December 31, 2017
USD JPY CNY EUR Others Total
Foreign
currency Won
equivalent Foreign
currency Won
equivalent Foreign
currency Won
equivalent Foreign
currency Won
equivalent Won
equivalent Won
equivalent
Liability:

Financial liabilities at FVTPL
41 43,423 79 752 — — 19 24,878 69,977 139,030
Deposits due to customers
13,744 14,725,686 195,176 1,852,440 21,865 3,578,142 883 1,129,802 2,396,826 23,682,896
Borrowings
6,604 7,080,118 2,218 21,056 — — 247 315,685 242,874 7,659,733
Debentures
3,467 3,714,411 — — 700 114,555 — — 375,749 4,204,715
Other financial liabilities
2,392 2,562,740 16,125 153,043 1,802 294,950 129 165,189 588,625 3,764,547

Total
26,248 28,126,378 213,598 2,027,291 24,367 3,987,647 1,278 1,635,554 3,674,051 39,450,921

Off-balance accounts
8,108 8,687,009 33,624 319,127 1,199 196,261 406 519,843 176,886 9,899,126

~~(3)~~(4) Liquidity risk
Liquidity risk refers to the risk that the Group may encounter difficulties in meeting obligations from its financial liabilities.
1) Liquidity risk management
Liquidity risk management is to prevent potential cash shortages as a result of mismatching the use of funds (assets) and sources of funds (liabilities) or unexpected cash outflows. The financial liabilities that are relevant to liquidity risk are incorporated within the scope of risk management. Derivatives instruments are excluded from those financial liabilities as they reflect expected cash flows for apre-determined period.
Assets and liabilities are grouped by account under Asset Liability Management (“ALM”) in accordance with the characteristics of the account. The Group manages liquidity risk by identifying the maturity gap and ~~then~~such gap ratio through ~~performing~~ various cash flows analysis (i.e. based on remaining maturity and contract period, etc.), while maintaining the gap ratio at or below the target limit.
2) Maturity analysis ofnon-derivative financial liabilities

a)
Cash flows of principals and interests by remaining contractual maturities ofnon-derivative financial liabilities are as follows (Unit: Korean Won in millions):

December 31, 2016 December 31, 2018
Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years Over 5
years Total Within 3
months 4 to 6
months 7 to 9
Months 10 to 12
months 1 to 5
years Over
5 years Total
Financial liabilities at FVTPL
678,813 1,529 94 47 154,325 — 834,808 191,825 —   —   —   —   —   191,825
Deposits due to customers
136,835,315 28,685,473 19,254,108 30,875,962 6,284,092 2,732,019 224,666,969 145,187,689 33,825,662 22,186,833 42,046,740 7,098,907 1,870,334 252,216,165
Borrowings
9,146,895 2,355,336 876,836 1,486,710 4,711,273 420,720 18,997,770 6,373,835 2,846,294 1,874,069 1,607,985 3,156,128 642,017 16,500,328
Debentures
2,108,780 2,077,387 860,596 1,518,524 14,641,016 4,116,768 25,323,071 2,153,916 2,416,483 2,201,070 2,584,230 18,955,400 2,403,077 30,714,176
Other financial liabilities
14,813,948 27,544 5,480 1,433 84,792 2,751,825 17,685,022 14,240,022 44,572 169,996 1,201 90,615 2,288,560 16,834,966

Total
163,583,751 33,147,269 20,997,114 33,882,676 25,875,498 10,021,332 287,507,640 168,147,287 39,133,011 26,431,968 46,240,156 29,301,050 7,203,988 316,457,460

December 31, 2019
Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years Over
5 years Total
Financial liabilities at FVTPL
115,156 —   —   —   —   —   115,156
Deposits due to customers
166,474,535 36,697,168 24,634,859 31,233,844 6,590,119 1,877,594 267,508,119
Borrowings
8,596,202 2,948,384 2,162,846 1,880,424 3,682,214 520,936 19,791,006
Debentures
2,378,211 2,894,577 3,330,658 2,466,142 19,211,409 2,537,391 32,818,388
Lease liabilities
46,072 42,549 37,420 35,210 232,985 40,698 434,934
Other financial liabilities
11,242,367 60,981 119,633 10,344 71,561 2,660,640 14,165,526

Total
188,852,543 42,643,659 30,285,416 35,625,964 29,788,288 7,637,259 334,833,129

December 31, 2017
Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years Over 5
years Total
Financial liabilities at FVTPL
168,442 155,984 1,717 512 375 — 327,030
Deposits due to customers
148,008,777 29,563,310 18,175,348 32,468,110 7,409,118 2,624,594 238,249,257
Borrowings
6,115,732 1,893,173 1,489,272 1,178,107 3,924,681 479,568 15,080,533
Debentures
1,955,255 2,452,565 1,018,714 1,744,731 19,770,380 2,869,699 29,811,344
Other financial liabilities
7,121,342 162,871 825 1,003 128,940 2,730,001 10,144,982

Total
163,369,548 34,227,903 20,685,876 35,392,463 31,233,494 8,703,862 293,613,146

b)
Cash flows of principals and interests by expected maturities ofnon-derivative financial liabilities ~~by estimated redemption or withdrawal~~ are as ~~follows;~~follows (Unit: Korean Won in millions):

December 31, 2016 December 31, 2018
Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years Over 5
years Total Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years Over 5
years Total
Financial liabilities at FVTPL
678,813 1,529 94 47 154,325 — 834,808 191,825 — — — — — 191,825
Deposits due to customers
148,089,355 30,163,971 17,600,803 20,947,335 5,128,387 2,331,993 224,261,844 163,787,990 38,126,886 20,993,436 23,262,092 5,230,533 17,649 251,418,586
Borrowings
9,146,901 2,355,332 876,835 1,486,710 4,711,273 420,719 18,997,770 6,373,835 2,846,294 1,874,069 1,607,985 3,156,128 642,017 16,500,328
Debentures
2,108,780 2,077,387 860,596 1,518,524 14,641,016 4,116,768 25,323,071 2,153,916 2,416,483 2,201,070 2,584,230 18,955,400 2,403,077 30,714,176
Other financial liabilities
14,813,948 27,544 5,480 1,433 84,792 2,751,825 17,685,022 14,240,022 44,572 169,996 1,201 90,615 2,288,560 16,834,966

Total
174,837,797 34,625,763 19,343,808 23,954,049 24,719,793   9,621,305 287,102,515 186,747,588 43,434,235 25,238,571 27,455,508 27,432,676 5,351,303 315,659,881

December 31, 2017
Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years Over 5
years Total
Financial liabilities at FVTPL
168,442 155,984 1,717 512 375 — 327,030
Deposits due to customers
159,146,602 31,298,562 16,667,130 21,995,294 6,487,047 2,278,756 237,873,391
Borrowings
6,115,732 1,893,173 1,489,272 1,178,107 3,924,681 479,568 15,080,533
Debentures
1,955,255 2,452,565 1,018,714 1,744,731 19,770,380 2,869,699 29,811,344
Other financial liabilities
7,121,342 162,871 825 1,003 128,940 2,730,001 10,144,982

Total
174,507,373 35,963,155 19,177,658 24,919,647 30,311,423 8,358,024 293,237,280

December 31, 2019
Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years Over 5
years Total
Financial liabilities at FVTPL
115,156 — — — — — 115,156
Deposits due to customers
175,309,271 38,219,793 23,649,424 24,102,750 5,547,232 150,233 266,978,703
Borrowings
8,596,202 2,948,384 2,162,846 1,880,424 3,682,214 520,936 19,791,006
Debentures
2,378,211 2,894,577 3,330,658 2,466,142 19,211,409 2,537,391 32,818,388
Lease liabilities
46,072 42,549 37,420 35,210 232,985 40,698 434,934
Other financial liabilities
11,242,367 60,981 119,633 10,344 71,561 2,660,640 14,165,526

Total
197,687,279 44,166,284 29,299,981 28,494,870 28,745,401 5,909,898 334,303,713

3) Maturity analysis of derivative financial liabilities ~~is as follows (Unit: Korean Won in millions):~~
Derivatives held for trading purpose are not managed in accordance with their contractual maturity, ~~but~~since the Group holds such financial instruments with the purpose of disposing or redemption before their maturity. As such, those derivatives are incorporated as ~~“Within~~“within 3 months” in the table below. Derivatives designated for hedging purpose are estimated by offsetting cash inflows and cash outflows.
The cash flow by the maturity of derivative financial liabilities as of December 31, ~~2016~~2018 and ~~2017~~2019 is as ~~follows:~~follows (Unit: Korean Won in millions):

   Within 3
months    4 to 6
months    7 to 9
months    10 to 12
months    1 to 5
years    Over 5
years    Total
December 31, 2016
   3,009,977    —    —    208    7,013    —    3,017,198
December 31, 2017
   3,150,149    —    —    381    67,373    —    3,217,903
      Remaining maturity
      Within 3
months 4 to 6
months 7 to 9
months 10 to 12
months 1 to 5
years    Over 5
years    Total
December 31, 2018
   Cash flow risk hedge    (1,880 ) (683 ) 8,080 14,133 14,103    —    33,753
   Fair value risk hedge    (3,835 ) 9,448 (3,541 ) 9,133 6,991    —    18,196
   Trading purpose    2,090,861 — — — —    —    2,090,861
December 31, 2019
   Cash flow risk hedge    1,839 (341 ) (298 ) (247 ) 6,249    —    7,202
   Trading purpose    2,843,195 — — — —    —    2,843,195
4) Maturity analysis ofoff-balance accounts (Guarantees and loan commitments)
The Group provides guarantees on behalf of customers. A financial guarantee represents an irrevocable undertaking that the Group ~~will~~should meet a customer’s obligations to third parties if the customer fails to do so. Under a loan commitment, the Group agrees to make funds available to a customer in the future. ~~Loan commitments which are usually for a specified term may be unconditionally cancellable or may persist, provided all conditions in the loan facility are satisfied or waived.~~ Commitments to lend include commercial standby facilities and credit lines, liquidity facilities to commercial paper conduits and utilized overdraft facilities. The maximum limit to be paid by the Group in accordance with guarantees and loan commitment only applies to principal amounts. There are contractual maturities for financial guarantees, such as guarantees for debentures issued or loans, unused loan commitments, and other guarantees, however, under the terms of the guarantees and unused loan commitments, funds should be paid upon demand from the counterparty. Details ofoff-balance accounts are as follows (Unit: Korean Won in millions):

   December 31, 2016    December 31, 2017    December 31, 2018    December 31, 2019
Guarantees
   14,761,784    12,859,715    12,666,417    12,618,917
Loan commitments
   83,795,496    80,760,325    97,796,704    103,651,674
~~(4)~~(5) Operational risk
The Group defines the operational risk that could cause a negative effect on capital resulting from inadequate internal process, labor work and systematic problem or external factors.
1) Operational risk management
The Group has been running the operational risk management system under Basel II. The Group developed ~~advanced measurement approached~~Advanced Measurement Approaches (“AMA”) to quantify required capital for operational risk. This system is used for reinforcement in foreign competitions, reducing the amount of risk capitals, managing the risk, and precaution for any unexpected occasions. This system has been tested by ~~the~~an independent third party and ~~this system~~ approved by the Financial Supervisory Service.
2) Operational risk measurement
To quantify required capital for operational risk, the Group applies ~~Advanced Measurement Approaches (AMA)~~AMA using internal and external loss data, ~~Business Environment~~business environment and ~~Internal Control Factors (BEICFs),~~internal control factors, and scenario ~~analysis (SBA).~~analysis. For the operational risk management for its subsidiaries, the Group adopted the Basic Indicator Approach.
~~(5)~~(6) Capital management
The Group complies with the standard of capital adequacy provided by financial regulatory authorities. The capital adequacy ~~ratio~~standard is based on Basel published by Basel III ~~of Basel~~ Committee on Banking Supervision in Bank for International Settlement in 2010 and ~~Basel III~~ was ~~applied from the end of~~implemented in Korea in December 2013. The capital adequacy ratio is calculated by dividing ~~required~~own capital by asset (weighted with a risk premium – risk weighted assets) based on the consolidated financial statements of the Group.
According to ~~this regulation,~~the above regulations, the Group is required to meet the following new minimum requirements: ~~6.25% and 5.38% Common Equity~~Tier 1 common capital ratio of 7.00%, a Tier 1 capital ratio ~~7.75%~~of 8.5% and ~~6.88% Tier 1~~a minimum total capital ratio ~~and 9.75% and 8.88% total~~of 10.5% as of December 31, 2019.
Details of the Group’s capital adequacy ratio as of December 31, ~~2017 and 2016, respectively. The details~~2019 are as follows (Unit: Korean ~~won~~Won in millions):

   December 31, ~~2016~~2019
Tier 1 capital
   ~~15,714,480~~19,135,300
Other Tier 1 capital
   ~~3,275,496~~3,340,252
Tier 2 capital
   ~~3,910,513~~4,639,519


Total risk-adjusted capital
   ~~22,900,489~~27,115,071


Risk-weighted assets for credit risk
   ~~138,018,500~~209,802,895
Risk-weighted assets for market risk
   ~~2,277,809~~5,586,757
Risk-weighted assets for operational risk
   ~~9,431,814~~12,656,301


Total risk-weighted assets
   ~~149,728,123~~228,045,953


Common Equity Tier 1 ratio
   ~~10.50~~8.39 %

Tier 1 capital ratio
   ~~12.68~~9.86 %
~~Total capital ratio~~
~~15.29~~ %
~~December 31, 2017~~
~~Tier 1 capital~~
~~16,074,987~~
~~Other Tier 1 capital~~
~~3,041,664~~
~~Tier 2 capital~~
~~3,486,555~~


Total ~~risk-adjusted~~ capital ratio
   ~~22,603,206~~11.89 %


~~Risk-weighted assets for credit risk~~
~~134,767,711~~
~~Risk-weighted assets for market risk~~
~~2,316,938~~
~~Risk-weighted assets for operational risk~~
~~9,677,559~~
~~Total risk-weighted assets~~
~~146,762,208~~
~~Common Equity Tier 1 ratio~~
~~10.95~~ %
~~Tier 1 capital ratio~~
~~13.03~~ %
~~Total capital ratio~~
~~15.40~~ %
5. OPERATING SEGMENTS
In evaluating the ~~operational performance~~results of the Group and allocating resources, ~~accordingly,~~ the Group’s Chief Operation Decision Maker ~~(the “CODM”~~(“CODM”) utilizes the information per ~~types~~type of customers. With the establishment of Woori Financial Group Inc. during the current term, the company reports to the CODM according to the organizational sectors below. This financial information of the segments is regularly reviewed by the CODM to make decisions about resources to be allocated to each segment and evaluate its performance.
(1) Segment by type of organization
~~(1)~~ ~~Segment by types of customers~~
The Group’s reporting segments ~~comprise the following customers: consumer~~consist of banking, ~~corporate banking,~~credit card, investment banking ~~capital market, credit card~~ and ~~headquarters~~other sectors, and ~~others. The reportable~~the composition of such reporting segments ~~are classified~~was divided based on internal report data periodically reviewed by the ~~target customers for whom~~management to evaluate the ~~service is being provided.~~performance of the segment and make decisions on the resources to be distributed.

Operational scope
Banking Loans/deposits and relevant services for Woori Bank and overseas subsidiaries’ customers
Credit card Credit card, cash services, card loans and relevant work of Woori Card Co., Ltd.
Investment banking Securities operation, sale of financial instruments, project financing and other related activities for comprehensive financing of Woori Investment bank Co., Ltd.
Others Woori Financial Group Inc., Woori FIS Co., Ltd., Woori Finance Research Institute, Woori Credit Information Co., Ltd., Woori Fund Services Inc., Woori Asset Management Corp., Woori Private Equity Asset Management Co., Ltd., Woori Global Asset Management Co., Ltd.
~~Consumer banking: Loans/deposits and financial services for consumers, etc.~~
~~Corporate banking: Loans/deposits and export/import, financial services for corporations, etc.~~
~~Investment banking: Domestic/foreign investment, structured finance, M&A, Equity & fund investment related business, venture advisory related tasks, real estate SOC development practices etc.~~
~~Capital market: Fund management, investment securities and derivatives business, etc.~~
~~Credit Card: Credit card, cash service and card loan, etc. and~~
~~Headquarter and others: Segments that do not belong to above operating segments~~
(2) The details of ~~operating~~ income (expense) by each segment are as follows (Unit: Korean Won in millions):

For the year ended December 31, 2015
Consumer
banking Corporate
banking Investment
banking Capital
market Credit
Card Head-
quarter and
Others Sub-total Inter-
segment
transaction Total
Net Interest income
1,289,088 1,699,913 5,601 40,913 378,019 743,092 4,156,626 605,274 4,761,900
Interest income
2,850,985 3,255,796 154,460 19,394 500,449 1,585,636 8,366,720 331,515 8,698,235
Interest expense
(1,227,921 ) (1,880,195 ) (18 ) (81 ) (122,430 ) (979,449 ) (4,210,094 ) 273,759 (3,936,335 )
Inter-segment
(333,976 ) 324,312 (148,841 ) 21,600 — 136,905 — — —
Netnon-interest income
554,957 513,686 115,111 18,015 98,034 279,437 1,579,240 (947,937 ) 631,303
Non-interest income
886,057 503,321 489,659 5,760,567 871,486 3,245,543 11,756,633 (366,953 ) 11,389,680
Non-interest expense
(353,032 ) (25,993 ) (374,548 ) (5,742,552 ) (773,452 ) (2,907,816 ) (10,177,393 ) (580,984 ) (10,758,377 )
Inter-segment
21,932 36,358 — — — (58,290 ) — — —
Other expense
(1,790,292 ) (1,795,561 ) 53,089 (44,187 ) (321,265 ) (470,592 ) (4,368,808 ) 327,191 (4,041,617 )
Administrative expense
(1,782,234 ) (925,566 ) (14,933 ) (16,945 ) (124,362 ) (553,539 ) (3,417,579 ) 267,192 (3,150,387 )
Impairment losses on credit loss and others
(8,058 ) (869,995 ) 68,022 (27,242 ) (196,903 ) 82,947 (951,229 ) 59,999 (891,230 )

Operating income
53,753 418,038 173,801 14,741 154,788 551,937 1,367,058 (15,472 ) 1,351,586
Non-operating income (expense)
(19,113 ) (2,189 ) 43,728 197 (5,150 ) 136,954 154,427 (54,067 ) 100,360

Net income before income tax expense
34,640 415,849 217,529 14,938 149,638 688,891 1,521,485 (69,539 ) 1,451,946
Income tax expense
(8,383 ) (98,886 ) (52,642 ) (3,615 ) (32,780 ) (136,891 ) (333,197 ) (43,357 ) (376,554 )

Net income
26,257 316,963 164,887 11,323 116,858 552,000 1,188,288 (112,896 ) 1,075,392

For the year ended December 31, 2017^(*1)
Banking Credit
card Investment
Banking Others^(*2) Reporting
segment
total Adjustments^(*3) Total
Net Interest income(expense)
4,082,895 497,534 31,082 126 4,611,637 609,013 5,220,650
Non-interest income(expense)
1,517,752 39,606 5,804 282,504 1,845,666 (593,640 ) 1,252,026
Impairment losses due to credit loss
(365,978 ) (235,116 ) 3,123 (33 ) (598,004 ) (187,129 ) (785,133 )
General and administrative expense^(*4)
(3,329,923 ) (163,536 ) (18,477 ) (276,683 ) (3,788,619 ) 257,818 (3,530,801 )
Net operating income(expense)
1,904,746 138,488 21,532 5,914 2,070,680 86,062 2,156,742

Non-operating income(expense)
(172,105 ) (5,219 ) (336 ) (4,848 ) (182,508 ) (24,728 ) (207,236 )

Net income(expense) before tax
1,732,641 133,269 21,196 1,066 1,888,172 61,334 1,949,506
Tax income(expense)
(378,320 ) (32,055 ) (1,174 ) (900 ) (412,449 ) (6,969 ) (419,418 )

Net income(loss)
1,354,321 101,214 20,022 166 1,475,723 54,365 1,530,088

(*1)
For comparative purpose, the category information of each customer from the previous term has been reclassified to profit or loss by operating segment according to the organization.
(*2)
Other subsidiaries include gains and losses from Woori FIS Co., Ltd., Woori Finance Research Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Inc. and Woori Private Equity Asset Management Co., Ltd.
(*3)
Adjustments were made for the presentation of profit or loss in accordance with the Accounting Standards from the reporting segments in accordance with the Managerial Accounting Standards.
(*4)
Depreciation and amortization 183,601 million Won are included in General and administrative expense. There are the Banking (128,060 million Won), Credit card (9,516 million Won), Investment banking (840 million Won), others (45,184 million Won) and adjustments (1 million Won), respectively.

For the year ended December 31, 2016
Consumer
banking Corporate
banking Investment
banking Capital
market Credit
Card Head-
quarter and
Others Sub-total Inter-
segment
transaction Total
Net Interest income
1,484,233 1,741,140 14,613 48,826 428,095 713,678 4,430,585 588,959 5,019,544
Interest income
2,979,811 3,026,148 153,160 19,575 556,681 1,492,148 8,227,523 284,789 8,512,312
Interest expense
(1,023,290 ) (1,780,990 ) (225 ) (324 ) (128,586 ) (863,523 ) (3,796,938 ) 304,170 (3,492,768 )
Inter-segment
(472,288 ) 495,982 (138,322 ) 29,575 — 85,053 — — —
Netnon-interest income
557,410 550,194 160,885 4,033 79,713 302,800 1,655,035 (955,695 ) 699,340
Non-interest income
923,810 535,514 605,026 7,590,087 986,147 4,563,280 15,203,864 (433,879 ) 14,769,985
Non-interest expense
(405,912 ) (32,873 ) (444,141 ) (7,586,054 ) (906,434 ) (4,173,415 ) (13,548,829 ) (521,816 ) (14,070,645 )
Inter-segment
39,512 47,553 — — — (87,065 ) — — —
Other expense
(1,875,579 ) (1,476,190 ) (110,863 ) (51,995 ) (364,137 ) (574,606 ) (4,453,370 ) 308,692 (4,144,678 )
Administrative expense
(1,788,672 ) (966,878 ) (14,983 ) (17,964 ) (148,001 ) (793,978 ) (3,730,476 ) 252,000 (3,478,476 )
Impairment losses on credit loss and others
(86,907 ) (509,312 ) (95,880 ) (34,031 ) (216,136 ) 219,372 (722,894 ) 56,692 (666,202 )

Operating income
166,064 815,144 64,635 864 143,671 441,872 1,632,250 (58,044 ) 1,574,206
Non-operating income (expense)
(35,081 ) (1,619 ) 46,559 (5,288 ) (1,504 ) 55,291 58,358 (79,175 ) (20,817 )

Net income before income tax expense
130,983 813,525 111,194 (4,424 ) 142,167 497,163 1,690,608 (137,219 ) 1,553,389
Income tax expense
(31,698 ) (203,983 ) (26,909 )�� 1,071 (32,774 ) 16,475 (277,818 ) 1,962 (275,856 )

Net income
99,285 609,542 84,285 (3,353 ) 109,393 513,638 1,412,790 (135,257 ) 1,277,533

For the year ended December 31, 2018^(*1)
Banking Credit card Investment
Banking Others^(*2) Reporting
segment
total Adjustments^(*3) Total
Net Interest income(expense)
4,453,511 509,999 43,081 1,142 5,007,732 643,219 5,650,951
Non-interest income(expense)
1,517,141 59,971 19,814 297,196 1,894,122 (832,165 ) 1,061,957
Impairment losses due to credit loss
4,913 (227,144 ) (3,898 ) (166 ) (226,296 ) (103,278 ) (329,574 )
General and administrative expense^(*4)
(3,416,320 ) (170,765 ) (26,081 ) (292,826 ) (3,905,993 ) 281,960 (3,624,033 )
Net operating income(expense)
2,559,245 172,060 32,915 5,345 2,769,565 (10,264 ) 2,759,301

Non-operating income(expense)
69,897 (5,547 ) (295 ) 199 64,255 (18,684 ) 45,571

Net income(expense) before tax
2,629,142 166,513 32,621 5,545 2,833,821 (28,949 ) 2,804,872
Tax income(expense)
(713,178 ) (39,979 ) 743 (2,238 ) (754,651 ) 1,428 (753,223 )

Net income(loss)
1,915,964 126,534 33,364 3,307 2,079,169 (27,520 ) 2,051,649

For the year ended December 31, 2017
Consumer
banking Corporate
banking Investment
banking Capital
market Credit
Cards Head-
quarters and
others Sub-total Inter-
segment
transaction Total
Net Interest income
1,702,939 1,795,377 12,124 36,883 463,603 622,790 4,633,716 586,934 5,220,650
Interest income
3,149,625 2,964,813 148,500 18,834 599,550 1,360,734 8,242,056 308,631 8,550,687
Interest expense
(955,836 ) (1,681,652 ) (243 ) — (135,947 ) (834,662 ) (3,608,340 ) 278,303 (3,330,037 )
Inter-segment
(490,850 ) 512,216 (136,133 ) 18,049 — 96,718 — — —
Netnon-interest income
649,950 571,336 152,168 69,671 73,537 389,004 1,905,666 (745,990 ) 1,159,676
Non-interest income
802,387 680,778 366,523 9,548,399 1,163,575 2,683,407 15,245,069 (395,833 ) 14,849,236
Non-interest expense
(253,961 ) (170,268 ) (214,355 ) (9,478,728 ) (1,090,038 ) (2,132,053 ) (13,339,403 ) (350,157 ) (13,689,560 )
Inter-segment
101,524 60,826 — — — (162,350 ) — — —
Other income(expense)
(1,906,561 ) (1,149,288 ) (63,835 ) 14,662 (398,652 ) (939,406 ) (4,443,080 ) 219,496 (4,223,584 )
Administrative expense
(1,808,974 ) (832,429 ) (12,881 ) (16,567 ) (163,536 ) (954,238 ) (3,788,625 ) 257,824 (3,530,801 )
Impairment losses due to credit loss and others
(97,587 ) (316,859 ) (50,954 ) 31,229 (235,116 ) 14,832 (654,455 ) (38,328 ) (692,783 )

Operating income
446,328 1,217,425 100,457 121,216 138,488 72,388 2,096,302 60,440 2,156,742
Non-operating income (expense)
(98,510 ) (3,153 ) 39,350 — (5,219 ) (112,734 ) (180,266 ) (26,970 ) (207,236 )

Net income before income tax expense
347,818 1,214,272 139,807 121,216 133,269 (40,346 ) 1,916,036 33,470 1,949,506
Income tax expense
(84,172 ) (296,634 ) (33,834 ) (29,335 ) (32,055 ) 63,396 (412,634 ) (6,784 ) (419,418 )

Net income
263,646 917,638 105,973 91,881 101,214 23,050 1,503,402 26,686 1,530,088

(*1)
For comparative display, the category information of each customer from the previous term has been reclassified to profit or loss by operating segment according to the organization.
(*2)
Other subsidiaries include gains and losses from Woori FIS Co., Ltd., Woori Finance Research Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Inc. and Woori Private Equity Asset Management Co., Ltd.
(*3)
Adjustments were made for the presentation of profit or loss in accordance with the Accounting Standards from the reporting segments in accordance with the Managerial Accounting Standards.
(*4)
Depreciation and amortization 216,735 million Won are included in General and administrative expense. There are the Banking (177,882 million Won), Credit card (11,477 million Won), Investment banking (977 million Won), others (26,398 million Won) of which total bis and adjustments (1 million Won), respectively.
For the year ended December 31, 2019
Banking Credit card Investment
banking Others^(*1) Sub-total Adjustments^(*2) Total
Net Interest income(expense)
4,583,386 553,956 54,077 2,290 5,193,709 699,997 5,893,706
Non-interest income(expense)
1,557,247 31,842 33,539 957,880 2,580,508 (1,533,917 ) 1,046,591
Impairment losses due to credit loss
(32,621 ) (259,604 ) (572 ) (538 ) (293,335 ) (80,909 ) (374,244 )
General and administrative expense^(*3)
(3,478,535 ) (190,062 ) (31,183 ) (323,528 ) (4,023,308 ) 257,231 (3,766,077 )
Net operating income(expense)
2,629,477 136,132 55,861 636,104 3,457,574 (657,598 ) 2,799,976

Non-operating income(expense)
(151,348 ) 13,889 (3,501 ) (1,545 ) (142,505 ) 65,578 (76,927 )

Net income(expense) before tax
2,478,129 150,021 52,360 634,559 3,315,069 (592,020 ) 2,723,049
Tax income(expense)
(616,110 ) (35,825 ) 998 (1,294 ) (652,231 ) (33,222 ) (685,453 )

Net income(loss)
1,862,019 114,196 53,358 633,265 2,662,838 (625,242 ) 2,037,596

(*1)
Other subsidiaries include gains and losses from Woori Financial Group Inc., Woori FIS Co., Ltd., Woori Finance Research Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Inc., Woori Asset Management Corp., Woori Private Equity Asset Management Co., Ltd. and Woori Global Asset Management Co., Ltd.
(*2)
Adjustments were made for the presentation of profit or loss in accordance with the Accounting Standards from the reporting segments in accordance with the Managerial Accounting Standards.
(*3)
Depreciation and amortization 481,176 million Won are included in General and administrative expense. There are the Banking (435,227 million Won), Credit card (28,367 million Won), Investment banking (2,212 million Won), others (16,492 million Won) and adjustments ((-) 1,122 million Won) respectively.
(3) Operating profit or loss and majornon-current assets from external customers for the period are as follows (Unit: Korean Won in millions):
   For the year ended December 31, 2018
   Operating income(expense)
from external customers    Major non-current assets^(*)
Domestic
   2,505,813    3,551,924
Foreign
   253,488    236,050




Total
   2,759,301    3,787,974




(*)
Investments in joint ventures and associates, investment properties, premises and equipment and intangible assets andright-of-use assets are included in majornon-current assets.
   For the year ended December 31, 2019
   Operating income(expense)
from external customers    Major non-current assets^(*)
Domestic
   2,500,504    4,908,140
Foreign
   299,472    387,284




Total
   2,799,976    5,295,424




(*)
Investments in joint ventures and associates, investment properties, premises and equipment and intangible assets andright-of-use assets are included in majornon-current assets.
~~(2)~~(4) Information ~~on products and services~~about major customers
The ~~products~~Group does not have any single customer that generates 10% or more of the ~~Group are classified as interest-bearing products such as loans, deposits and debt securities andnon-interest~~ bearing products such as loan commitment, credit commitment, equity securities, and credit card service. This classification of products has been reflected in the segment information presenting interest income and~~non-interest~~ ~~income.~~
~~(3) Information on geographical areas~~
~~Among the~~ Group’s ~~revenue (interest income andnon-interest~~ income) from services, revenue from the domestic customers for the years ended December 31, 2015, 2016 and 2017 amounted to 18,974,359 million Won, 22,265,508 million Won and 22,279,666 million Won, respectively, and revenue from the foreign customers amounted to 1,113,556 million Won, 1,016,788 million Won and 1,120,257 million Won, respectively. Among the Group’s~~non-current~~ ~~assets (investments in joint ventures and associates, investment properties, premises and equipment and intangible assets),non-current~~ assets attributed to domestic subsidiaries as of December 31, 2016 and 2017 are 3,498,327 million Won and 3,550,764 million Won, respectively, and foreign subsidiaries are 240,946 million Won and 233,732 million Won, respectively.total revenue.
6. STATEMENTS OF CASH ~~AND CASH EQUIVALENTS~~FLOWS
(1) Details of cash and cash equivalents are as follows (Unit: Korean Won in millions):

   December 31,
2016    December 31,
2017    December 31,
2018    December 31,
2019
Cash
   2,113,739    2,009,363    2,107,861    1,957,997
Foreign currencies
   742,340    617,155    725,083    625,999
Demand deposits
   4,238,956    3,423,355    3,512,216    3,684,044
Fixed deposits
   496,289    858,413    402,734    124,526








Total
   7,591,324    6,908,286    6,747,894    6,392,566








(2) Significant transactions of investing activities and financing activities not involving cash inflows and outflows are as follows (Unit: Korean Won in millions):

   For the years ended
December 31
   2016 2017
Changes in other comprehensive income (loss) due to valuation of AFS financial assets
   12,586 (84,498 )
Changes in other comprehensive income (loss) of investment in associates
   (7,937 ) 612
Changes in other comprehensive income of foreign operations translation
   28,712 (208,329 )
Changes in other comprehensive income related to valuation of cash flow hedging
   10,371 777
Changes in other comprehensive income due to remeasurement of the net defined benefit liability
   34,162 10,497
Changes in investments in associates due to equity swap and others
   — 51,227
Changes in investments in associates due to accounts transfer
   (156,708 ) (62,571 )
Changes in unpaid dividends of hybrid equity securities
   5,187 (10,658 )
   For the years ended
December 31
   2017 2018 2019
Changes in other comprehensive income related to valuation of financial assets at FVTOCI
   — 2,505 (14,141 )
Changes in other comprehensive income related toavailable-for-sale securities
   (84,498 ) — —
Changes in other comprehensive income related to valuation of equity method investments
   612 2,958 613
Changes in other comprehensive income related to valuation loss on cash flow hedge
   777 (4,646 ) (1,823 )
Changes in equity related to assets held for sale
   4,145 (4,145 ) —
Changes in financial assets at FVTOCI as a result of debt-equity swap
   — 14,378 96,527
Changes in investments in associates due to accounts transfer
   (62,571 ) (89,151 ) 651
Changes in investments in associates due to debt-equity swap
   51,227 — —
Classified to premises and equipment from investment properties
   — — 166,892
Changes in intangible assets related to account payables
   — — 29,705
Classified to assets held for distribution (sale) from premises and equipment
   — 6,243 (95 )
Increase inright-of-use assets and lease liabilities
   — — 692,103
Changes in unpaid dividends on hybrid equity securities
   (10,658 ) 3,569 —
Comprehensive stock exchange
   — — 581,609
(3) Adjustments of liabilities from financing activities in current and prior year are as follows (Unit: Korean Won in millions):

   For the year ended December 31, 2017    For the year ended December 31, 2018
   January 1, 2017    Issuances    Redemption Not involving cash inflows and
outflows    December 31, 2017    Beginning
balance    Cash flow    Not involving cash inflows and
outflows    Ending
balance
   Foreign
Exchange Variation
of gains on
valuation
of hedged
items Others       Foreign
Exchange    Variation
of gains on
valuation
of hedged
items Others
Borrowings
   18,769,515    9,057,999    (12,692,882 ) (350,429 ) — 503    14,784,706    14,784,706    1,257,121    161,078    — 81    16,202,986
Debentures
   23,565,449    18,438,221    (13,620,520 ) (478,249 ) (39,373 ) 4,123    27,869,651    27,869,651    612,331    267,339    (25,498 ) 12,039    28,735,862


















Total
   42,334,964    27,496,220    (26,313,402 ) (828,678 ) (39,373 ) 4,626    42,654,357    42,654,357    1,869,452    428,417    (25,498 ) 12,120    44,938,848


















~~7. FINANCIAL ASSETS AT FAIR VALUE THRUGH PROFIT OR LOSS~~
   For the year ended December 31, 2019
   Beginning
balance    Cash flow Not involving cash inflows and outflows Ending
balance
Foreign
Exchange Variation of
gains on
valuation of
hedged items    Business
Combination
(Note 44)    Others
Borrowings
   16,202,986    3,081,757 (285,607 ) —      —      (216 ) 18,998,920
Debentures
   28,735,862    1,858,762 155,433 85,984    —      22,014 30,858,055
Lease liabilities^(*)
   377,030    (217,867 ) (819 ) —      5,552    255,149 419,045








Total
   45,315,878    4,722,652 (130,993 ) 85,984    5,552    276,947 50,276,020








(*)
The amount of lease liability at the beginning of the current in applying IFRS 16 is reflected.
7.
FINANCIAL ASSETS AT FVTPL
(1) ~~Financial~~Details of financial assets at FVTPL as of December 31, 2018 and 2019 are as follows (Unit: Korean Won in millions):

   December 31,
2016    December 31,
2017
Financial assets held for trading
   5,633,724    5,820,787
Financial assets designated at FVTPL
   17,000    22,290




Total
   5,650,724    5,843,077




   December 31,
2018    December 31,
2019
Financial assets at fair value through profit or loss mandatorily measured at fair value
   6,126,316    8,069,144
(2) Financial assets at fair value through profit or loss mandatorily measured at fair value and financial assets held for trading are as follows (Unit: Korean Won in millions):

   December 31,
2016    December 31,
2017    December 31,
2018    December 31,
2019
Deposits:

Deposits indexed to gold prices
   26,180    25,972
Gold banking asset
   26,935    27,901
Securities:

Debt securities

Korean treasury and government agencies
   519,337    540,438    516,173    872,954
Financial institutions
   1,444,459    1,476,498    533,393    600,303
Corporates
   681,120    627,397    774,589    762,265
Others
   —      101,563
Equity securities
   35,983    21,666    455,666    688,350
Capital contributions
   422,614    515,199
Beneficiary certificates
   23,891    13,041    985,417    1,366,233
Loaned securities
   4,459    —








Sub-total
   2,709,249    2,679,040    3,687,852    4,906,867








Derivatives instruments assets
   2,898,295    3,115,775
Loans
   385,450    212,473
Derivatives assets
   2,026,079    2,921,903








Total
   5,633,724    5,820,787    6,126,316    8,069,144








(3) Financial assets at fair value through profit or loss designated as upon initial recognition is nil as of December 31, 2018 and 2019.
8. FINANCIAL ASSETS AT FVTOCI
(1) Details of financial assets at ~~FVTPL~~FVTOCI as of December 31, 2018 and 2019 is as follows (Unit: Korean Won in millions):

   December 31,
2016    December 31,
2017
Debt securities
   4,348    9,694
Equity securities
   12,652    12,596




Total
   17,000    22,290




   December 31, 2018    December 31, 2019
Debt securities:

Korean treasury and government agencies
   1,358,378    1,152,711
Financial institutions
   11,252,790    17,769,924
Corporates
   1,824,843    3,917,004
Bond denominated in foreign currencies
   2,636,209    3,874,785




Sub-total
   17,072,220    26,714,424




Equity securities
   951,174    935,370
Securities loaned
   40,029    80,737




Total
   18,063,423    27,730,531




8.~~AVAILABLE-FOR-SALE~~ ~~FINANCIAL ASSETS~~
(2) Details of ~~AFS~~equity securities designated as financial assets at FVTOCI as of December 31, 2018 and 2019 are as follows (Unit: Korean Won in millions):

   As of December 31, 2016
   Amortized
cost    Unrealized
gains    Unrealized
losses Fair value
Debt securities:

Korean treasury and government agencies
   3,778,688    13,700    (3,758 ) 3,788,630
Financial institutions
   6,310,517    7,585    (3,904 ) 6,314,198
Corporates
   4,336,195    93,957    (20,966 ) 4,409,186
Asset-backed securities
   250,630    —    (1,427 ) 249,203
Bond denominated in foreign currencies
   1,226,893    1,076    (16,105 ) 1,211,864
Other debt securities
   73,360    1,871    (3 ) 75,228






Sub-total
   15,976,283    118,189    (46,163 ) 16,048,309






Equity securities
   1,034,299    420,038    (724 ) 1,453,613
Beneficiary certificates
   2,802,847    40,405    (21,170 ) 2,822,082
Securities loaned
   493,625    3,040    (3,086 ) 493,579






Total
   20,307,054    581,672    (71,143 ) 20,817,583






Purpose of acquisition
   December 31,
2018    December 31,
2019    Remarks
Strategic business partnership
   662,934    678,846
Debt-equity swap
   287,990    256,480
Others
   250    44    Cooperative insurance, etc.





Total
   951,174    935,370





(3) Changes in the allowance for credit losses and gross carrying amount of financial assets at FVTOCI are as follows (Unit: Korean Won in millions):
1) Allowance for credit losses

   As of December 31, 2017
   Amortized
cost    Unrealized
gains    Unrealized
losses Fair value
Debt securities:

Korean treasury and government agencies
   2,338,760    1,193    (9,386 ) 2,330,567
Financial institutions
   5,225,921    1,504    (10,159 ) 5,217,266
Corporates
   2,727,016    3,851    (5,635 ) 2,725,232
Asset-backed securities
   309,518    —    (1,337 ) 308,181
Bond denominated in foreign currencies
   2,449,954    3,100    (10,475 ) 2,442,579
Other debt securities
   35,154    21    (12 ) 35,163






Sub-total
   13,086,323    9,669    (37,004 ) 13,058,988






Equity securities
   982,393    430,921    (2,236 ) 1,411,078
Beneficiary certificates
   697,655    18,701    (3,728 ) 712,628
Securities loaned
   169,988    664    (396 ) 170,256






Total
   14,936,359    459,955    (43,364 ) 15,352,950






   For the year ended December 31, 2018
   Stage 1 Stage 2 Stage 3    Total
Beginning balance
   (4,107 ) (129 ) —    (4,236 )
Transfer to12-month expected credit losses
   — — —    —
Transfer to lifetime expected credit losses
   — — —    —
Transfer to credit-impaired financial assets
   — — —    —
Net provision of allowance for credit losses
   (1,918 ) (109 ) —    (2,027 )
Others^(*)
   86 — —    86




Ending balance
   (5,939 ) (238 ) —    (6,177 )




9.~~HELD-TO-MATURITY~~ ~~FINANCIAL ASSETS~~
(*)
Others consist of foreign currencies translation, etc.
   For the year ended December 31, 2019
   Stage 1 Stage 2 Stage 3    Total
Beginning balance
   (5,939 ) (238 ) —    (6,177 )
Transfer to12-month expected credit losses
   — — —    —
Transfer to lifetime expected credit losses
   — — —    —
Transfer to credit-impaired financial assets
   — — —    —
Net provision of allowance for credit losses
   (3,297 ) — —    (3,297 )
Disposal
   615 238 —    853
Others^(*)
   52 — —    52




Ending balance
   (8,569 ) — —    (8,569 )




(*)
Others consist of foreign currencies translation, etc.
2) Gross carrying amount
   For the year ended December 31, 2018
   Stage 1 Stage 2 Stage 3    Total
Beginning balance
   12,843,997 30,212 —    12,874,209
Transfer to12-month expected credit losses
   — — —    —
Transfer to lifetime expected credit losses
   — — —    —
Transfer to credit-impaired financial assets
   — — —    —
Acquisition
   13,275,429 10,000 —    13,285,429
Disposal / Redemption
   (9,146,307 ) (15,047 ) —    (9,161,354 )
Gain (loss) on valuation
   70,017 (59 ) —    69,958
Amortization based on effective interest method
   10,195 47 —    10,242
Others^(*)
   33,765 — —    33,765




Ending balance
   17,087,096 25,153 —    17,112,249




(*)
Others consist of foreign currencies translation, etc.
   For the year ended December 31, 2019
   Stage 1 Stage 2 Stage 3    Total
Beginning balance
   17,087,096 25,153 —    17,112,249
Transfer to12-month expected credit losses
   — — —    —
Transfer to lifetime expected credit losses
   — — —    —
Transfer to credit-impaired financial assets
   — — —    —
Acquisition
   23,774,375 — —    23,774,375
Disposal / Redemption
   (14,224,358 ) (25,000 ) —    (14,249,358 )
Gain (loss) on valuation
   48,956 (153 ) —    48,803
Amortization based on effective interest method
   14,629 — —    14,629
Business combination (Note 44)
   24,985 — —    24,985
Others^(*)
   69,478 — —    69,478 ��




Ending balance
   26,795,161 — —    26,795,161




(*)
Others consist of foreign currencies translation, etc.
(4) During the current term, the Group disposed its equity securities, designated as financial assets at FVTOCI in accordance with the sale settlement of the creditors and the fair value at disposal is 34,841 million Won and the cumulative loss at disposal is 38,995 million Won.
9. SECURITIES AT AMORTIZED COST
(1) Details of ~~HTM financial assets~~securities at amortized cost as of December 31, 2018 and December 31, 2019 are as follows (Unit: Korean Won in millions):

   As of December 31, 2016
   Amortized
cost    Unrealized
gains    Unrealized
losses Fair value    December 31, 2018 December 31, 2019
Korean treasury and government agencies
   3,754,356    26,366    (6,391 ) 3,774,331    7,523,458 8,044,040
Financial institutions
   5,168,487    9,236    (4,940 ) 5,172,783    9,474,922 6,694,614
Corporates
   4,823,356    58,176    (7,093 ) 4,874,439    5,707,063 5,068,489
Bond denominated in foreign currencies
   164,052    —    (428 ) 163,624    234,041 518,907
Allowance for credit losses
   (6,925 ) (5,511 )








Total
   13,910,251    93,778    (18,852 ) 13,985,177    22,932,559 20,320,539








   As of December 31, 2017
   Amortized
cost    Unrealized
gains    Unrealized
losses Fair value
Korean treasury and government agencies
   3,994,857    6,944    (15,266 ) 3,986,535
Financial institutions
   7,245,426    2,923    (15,067 ) 7,233,282
Corporates
   5,311,970    12,367    (25,326 ) 5,299,011
Bond denominated in foreign currencies
   197,043    832    (1,024 ) 196,851






Total
   16,749,296    23,066    (56,683 ) 16,715,679






(2) Changes in the allowance for credit losses and gross carrying amount of securities at amortized cost are as follows (Unit: Korean Won in millions):
1) Allowance for credit losses
   For the year ended December 31, 2018
   Stage 1 Stage 2    Stage 3    Total
Beginning balance
   (5,078 ) —    —    (5,078 )
Transfer to12-month expected credit losses
   — —    —    —
Transfer to lifetime expected credit losses
   — —    —    —
Transfer to credit-impaired financial assets
   — —    —    —
Net provision of allowance for credit losses
   (1,922 ) —    —    (1,922 )
Disposal
   22 —    —    22
Others^(*)
   54 —    —    54






Ending balance
   (6,924 ) —    —    (6,924 )






(*)
Others consist of foreign currencies translation, etc.
   For the years ended December 31, 2019
   Stage 1 Stage 2    Stage 3    Total
Beginning balance
   (6,924 ) —    —    (6,924 )
Transfer to12-month expected credit losses
   — —    —    —
Transfer to lifetime expected credit losses
   — —    —    —
Transfer to credit-impaired financial assets
   — —    —    —
Net reversal of allowance for credit losses
   1,415 —    —    1,415
Others^(*)
   (2 ) —    —    (2 )






Ending balance
   (5,511 ) —    —    (5,511 )






(*)
Others consist of foreign currencies translation, etc.
2) Gross carrying amount
   For the year ended December 31, 2018
   Stage 1 Stage 2    Stage 3    Total
Beginning balance
   16,749,296 —    —    16,749,296
Transfer to12-month expected credit losses
   — —    —    —
Transfer to lifetime expected credit losses
   — —    —    —
Transfer to credit-impaired financial assets
   — —    —    —
Acquisition
   15,622,847 —    —    15,622,847
Disposal/Redemption
   (9,426,757 ) —    —    (9,426,757 )
Amortization based on effective interest method
   (7,970 ) —    —    (7,970 )
Others^(*)
   2,068 —    —    2,068






Ending balance
   22,939,484 —    —    22,939,484






(*)
Others consist of foreign currencies translation, etc.
   For the year ended December 31, 2019
   Stage 1 Stage 2    Stage 3    Total
Beginning balance
   22,939,484 —    —    22,939,484
Transfer to12-month expected credit losses
   — —    —    —
Transfer to lifetime expected credit losses
   — —    —    —
Transfer to credit-impaired financial assets
   — —    —    —
Acquisition
   6,092,078 —    —    6,092,078
Disposal/Redemption
   (8,709,947 ) —    —    (8,709,947 )
Amortization based on effective interest method
   (3,286 ) —    —    (3,286 )
Others^(*)
   7,721 —    —    7,721






Ending balance
   20,326,050 —    —    20,326,050






(*)
Others consist of foreign currencies translation, etc.
10. LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST, AND LOANS AND RECEIVABLES
(1) Details of loans and ~~receivables~~other financial assets at amortized cost as of December 31, 2018 and 2019 are as follows (Unit: Korean Won in millions):

   December 31,
2016    December 31,
2017    December 31,
2018    December 31,
2019
Due from banks
   14,815,476    8,868,378    14,151,012    14,492,223
Loans
   235,400,585    251,523,301    260,819,917    271,032,244
Other receivables
   8,176,572    6,714,525
Other financial assets
   7,486,649    8,193,226








Total
   258,392,633    267,106,204    282,457,578    293,717,693








(2) Details of due from banks are as follows (Unit: Korean Won in millions):

~~(2)~~ ~~Details of due from banks are as follows (Unit: Korean Won in millions):~~
   December 31,
2016 December 31,
2017    December 31,
2018 December 31,
2019
Due from banks in local currency:

Due from the Bank of Korea
   11,395,162 6,246,496
Due from the depository banks
   3 30,003
Due fromnon-monetary financial institutions
   9,811 150
Due from The Bank of Korea (“BOK”)
   11,034,602 11,028,850
Due from depository banks
   90,988 82,509
Due fromnon-depository institutions
   76 378
Due from the Korea Exchange
   1,625 50,000    30,000 50,113
Others
   73,283 97,365    85,915 43,253
Allowance for credit losses
   (2,798 ) (1,541 )    (3,069 ) (2,865 )




Sub-total
   11,477,086 6,422,473    11,238,512 11,202,238




Due from banks in foreign currencies:

Due from banks on demand
   877,636 794,353    828,022 1,122,521
Due from banks on time
   1,684,631 972,915    1,288,303 1,296,842
Others
   778,418 679,554    798,493 872,617
Allowance for credit losses
   (2,295 ) (917 )    (2,318 ) (1,995 )




Sub-total
   3,338,390 2,445,905    2,912,500 3,289,985




Total
   14,815,476 8,868,378    14,151,012 14,492,223




(3) Details of restricted due from banks are as follows (Unit: Korean Won in millions):

~~Financial institution~~

Counterparty
December 31,
~~2016~~2018
Reason of restriction
Due from banks in local ~~currency:~~currencies:

Due from ~~the Bank of Korea~~BOK

The ~~Bank of Korea~~BOK
~~11,395,162~~11,034,602
Reserve deposits
under the BOK Act
Due from KSFC
Korea Securities Finance Corp.
30,000
Customer’s deposit reserve
Others

~~Samsung Investment & Securities Co., Ltd.~~The Korea Exchange and others
~~70,304~~51,889
~~Reserve deposits of the futures, option~~Central counterparty KRW margin and others

Sub-total
~~11,465,466~~11,116,491

Due from banks in foreign currencies:

Due from banks on demand

The ~~Bank of Korea~~BOK and others
~~854,612~~780,576
Reserve deposits under the BOK Act and others
Others

~~The People’s Bank of China~~Korea Investment Securities and others
~~778,418~~798,493 ~~Reserve~~
Overseas futures and options trade deposits and others

Sub-total
~~1,633,030~~1,579,069

Total
~~13,098,496~~12,695,560

~~Financial institution~~

Counterparty
December 31,
~~2017~~2019
Reason of restriction
Due from banks in local ~~currency:~~currencies:

Due from ~~the Bank of Korea~~BOK

The ~~Bank of Korea~~BOK
~~6,246,496~~11,028,850
Reserve deposits
under the BOK Act
Due from KSFC
Korea Securities Finance Corp.
50,000
Customer’s deposit reserve
Others

~~the~~The Korea Exchange and others
~~94,394~~41,645
~~Centralcounterparty~~Central counterparty KRW margin and others

Sub-total
~~6,340,890~~11,120,495

Due from banks in foreign currencies:

Due from banks on demand

The ~~Bank of Korea~~BOK and others
~~787,520~~1,103,917
Reserve deposits under ~~The~~the BOK Act and others
Foreign currency deposits on time
National Bank Cambodia
58
Reserve deposits and others
Others

~~The People’s Bank of China~~Korea Investment & Securities and others
~~367,108~~872,603
~~Reserve~~Overseas futures and options trade deposits and others

Sub-total
~~1,154,628~~1,976,578

Total
  ~~7,495,518~~13,097,073

(4) Changes in the allowance for credit losses and gross carrying amount of due from banks are as follows (Unit: Korean Won in millions):
1) Allowance for credit losses
   For the year ended December 31, 2018
   Stage 1 Stage 2    Stage 3    Total
Beginning balance
   (3,092 ) —      —      (3,092 )
Transfer to12-month expected credit losses
   —   —      —      —
Transfer to lifetime expected credit losses
   —   —      —      —
Transfer to credit-impaired financial assets
   —   —      —      —
Net provision of allowance for credit losses
   (2,219 ) —      —      (2,219 )
Others^(*)
   (76 ) —      —      (76 )






Ending balance
   (5,387 ) —      —      (5,387 )






(*)
Others consist of foreign currencies translation, etc.
   For the year ended December 31, 2019
   Stage 1 Stage 2    Stage 3    Total
Beginning balance
   (5,387 ) —      —      (5,387 )
Transfer to12-month expected credit losses
   —   —      —      —
Transfer to lifetime expected credit losses
   —   —      —      —
Transfer to credit-impaired financial assets
   —   —      —      —
Reversal of allowance for credit losses
   544 —      —      544
Others^(*)
   (17 ) —      —      (17 )






Ending balance
   (4,860 ) —      —      (4,860 )






(*)
Others consist of foreign currencies translation, etc.
2) Gross carrying amount
   For the year ended December 31, 2018
   Stage 1 Stage 2    Stage 3    Total
Beginning balance
   8,870,835 —      —      8,870,835
Transfer to12-month expected credit losses
   —   —      —      —
Transfer to lifetime expected credit losses
   —   —      —      —
Transfer to credit-impaired financial assets
   —   —      —      —
Net increase
   5,302,244 —      —      5,302,244
Others^(*)
   (16,680 )       (16,680 )






Ending balance
   14,156,399 —      —      14,156,399






(*)
Others consist of foreign currencies translation, etc.
   For the year ended December 31, 2019
   Stage 1 Stage 2    Stage 3    Total
Beginning balance
   14,156,399 —    —    14,156,399
Transfer to12-month expected credit losses
   — —    —    —
Transfer to lifetime expected credit losses
   — —    —    —
Transfer to credit-impaired financial assets
   — —    —    —
Net increase
   313,991 —    —    313,991
Business combination (Note 44)
   35,910 —    —    35,910
Others^(*)
   (9,217 ) —    —    (9,217 )






Ending balance
   14,497,083 —    —    14,497,083






(*)
Others consist of foreign currencies translation, etc.
(5) Details of loans are as follows (Unit: Korean Won in millions):

   December 31,
2016 December 31,
2017    December 31,
2018 December 31,
2019
Loans in local currency
   191,309,481 200,213,230    210,701,421 221,484,049
Loans in foreign currencies
   14,101,839 13,147,888    15,239,032 18,534,270
Domestic banker’s letter of credit
   3,754,030 2,516,907
Domestic banker’s usance
   2,934,366 2,899,651
Credit card accounts
   6,673,765 6,827,295    8,051,384 8,398,605
Bills bought in foreign currencies
   7,758,575 8,197,159    7,874,457 4,772,093
Bills bought in local currency
   414,451 334,714    22,885 61,362
Factoring receivables
   96,763 137,523    45,851 20,905
Advances for customers on guarantees
   25,197 23,620    13,810 12,616
Privately placed bonds
   328,405 362,319
Private placement bonds
   365,531 307,339
Securitized loans
   252,690 563,152    1,377,072 2,250,042
Call loans
   2,985,077 3,003,455    2,669,080 3,290,167
Bonds purchased under resale agreements
   8,854,753 16,859,064    11,701,951 8,981,752
Others
   1,037,283 980,448
Loan origination costs and fees
   458,639 510,860    574,178 620,791
Others
   251,635 607,325
Present value discount
   (13,827 ) (10,988 )
Discounted present value
   (10,308 ) (6,826 )
Allowance for credit losses
   (1,850,888 ) (1,770,222 )    (1,778,076 ) (1,575,020 )




Total
   235,400,585 251,523,301    260,819,917 271,032,244




~~(5) Details of other~~(6) Changes in the allowances for losses on loans and receivables for the year ended December 31, 2017 are as follows (Unit: Korean Won in millions):

   December 31,
2016 December 31,
2017
CMA accounts
   190,000 135,000
Receivables
   5,417,676 4,459,318
Accrued income
   1,080,489 1,026,273
Telex and telephone subscription rights and refundable deposits
   1,019,577 984,620
Other debtors
   639,945 166,877
Allowance for credit losses
   (171,115 ) (57,563 )


Total
   8,176,572 6,714,525


   For the year ended December 31, 2017
   Consumers Corporates Credit card Others Total
Beginning balance
   (163,858 ) (1,498,842 ) (155,372 ) (209,024 ) (2,027,096 )
Net reversal (provision) of allowance for loan losses
   (131,275 ) (539,222 ) (203,968 ) 12,192 (862,273 )
Recoveries of loans previously charged off
   (45,060 ) (84,413 ) (51,366 ) (68 ) (180,907 )
Charge-off
   142,099 453,249 228,640 63,181 887,169
Disposal
   898 65,145 — 29,186 95,229
Unwinding effect
   8,643 36,548 — — 45,191
Others^(*)
   908 211,729 1 (193 ) 212,445


Ending balance
   (187,645 ) (1,355,806 ) (182,065 ) (104,726 ) (1,830,242 )


~~(6)~~
(*)
Others consist of debt-equity swap, foreign currencies translation and etc.
Changes in the allowance for ~~probable~~ credit losses onof loans for the years ended December 31, 2018 and ~~receivables~~2019 are as follows (Unit: Korean Won in millions):

   For the year ended December 31, 2015
   Consumers Corporates Credit card Others Total
Beginning balance
   (326,435 ) (2,128,090 ) (129,117 ) (370,264 ) (2,953,906 )
Net provision
   (103,166 ) (744,416 ) (180,563 ) (83,994 ) (1,112,139 )
Recoveries ofwritten-off loans
   (29,219 ) (198,089 ) (34,207 ) — (261,515 )
Charge-off
   240,541 1,139,102 198,077 592 1,578,312
Sales of loans and receivables
   2,518 138,055 — 866 141,439
Unwinding effect
   12,514 99,854 — — 112,368
Others
   (186 ) 7,390 — 10,180 17,384


Ending balance
   (203,433 ) (1,686,194 ) (145,810 ) (442,620 ) (2,478,057 )


   For the year ended December 31, 2018
   Consumers Corporates
   Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance
   (101,479 ) (41,358 ) (117,168 ) (365,251 ) (255,922 ) (905,243 )
Transfer to12-month expected credit losses
   (9,848 ) 8,966 882 (24,324 ) 22,658 1,666
Transfer to lifetime expected credit losses
   5,905 (7,183 ) 1,278 15,074 (407,780 ) 392,706
Transfer to credit-impaired financial assets
   79,078 47,343 (126,421 ) 62,731 97,750 (160,481 )
Net reversal(provision) of allowance for credit losses
   (86,224 ) (56,164 ) (49,637 ) (68,381 ) 193,392 (94,004 )
Recovery
   — — (51,855 ) — — (127,630 )
Charge-off
   — — 204,552 — — 290,109
Disposal
   — 33 1,633 — 237 49,902
Interest income from impaired loans
   — — 7,945 — — 23,381
Others^(*)
   (1,941 ) (5 ) (1,115 ) 31,840 46 1,921


Ending balance
   (114,509 ) (48,368 ) (129,906 ) (348,311 ) (349,619 ) (527,673 )


   For the year ended December 31, 2018
   Credit card accounts Total
   Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance
   (57,134 ) (71,463 ) (102,858 ) (523,864 ) (368,743 ) (1,125,269 )
Transfer to12-month expected credit losses
   (13,846 ) 13,738 108 (48,018 ) 45,362 2,656
Transfer to lifetime expected credit losses
   5,871 (6,194 ) 323 26,850 (421,157 ) 394,307
Transfer to credit-impaired financial assets
   82,406 84,048 (166,454 ) 224,215 229,141 (453,356 )
Net reversal(provision) of allowance for credit losses
   (82,083 ) (98,260 ) (33,205 ) (236,688 ) 38,968 (176,846 )
Recovery
   — — (57,565 ) — — (237,050 )
Charge-off
   — — 242,879 — — 737,540
Disposal
   — — — — 270 51,535
Interest income from impaired loans
   — — — — — 31,326
Others^(*)
   (1 ) — — 29,898 41 806


Ending balance
   (64,787 ) (78,131 ) (116,772 ) (527,607 ) (476,118 ) (774,351 )


(*)
Changes due to debt-equity swap, foreign currencies translation, and etc.

   For the year ended December 31, 2016
   Consumers Corporates Credit card Others Total
Beginning balance
   (203,433 ) (1,686,194 ) (145,810 ) (442,620 ) (2,478,057 )
Net provision
   (73,356 ) (536,359 ) (207,730 ) (73,318 ) (890,763 )
Recoveries ofwritten-off loans
   (53,679 ) (192,183 ) (44,393 ) (19,233 ) (309,488 )
Charge-off
   155,424 722,359 242,561 236,857 1,357,201
Sales of loans and receivables
   2,055 113,177 — 91,800 207,032
Unwinding effect
   10,319 66,901 — — 77,220
Others
   (1,188 ) 13,457 — (2,510 ) 9,759


Ending balance
   (163,858 ) (1,498,842 ) (155,372 ) (209,024 ) (2,027,096 )


   For the year ended December 31, 2019
   Consumers Corporates
   Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance
   (114,509 ) (48,368 ) (129,906 ) (348,311 ) (349,619 ) (527,673 )
Transfer to12-month expected credit losses
   (14,430 ) 13,661 769 (58,537 ) 49,884 8,653
Transfer to lifetime expected credit losses
   14,022 (15,332 ) 1,310 8,215 (20,473 ) 12,258
Transfer to credit-impaired financial assets
   8,603 10,312 (18,915 ) 3,308 17,852 (21,160 )
Net reversal(provision) of allowance for credit losses
   21,802 (38,203 ) (146,204 ) 86,565 6,855 (75,392 )
Recovery
   — — (61,914 ) — — (66,359 )
Charge-off
   — — 217,382 — — 222,537
Disposal
   — — 2,763 — 1 42,095
Interest income from impaired loans
   — — 9,647 — — 17,887
Business combination (Note 44)
   — — — (9 ) (2,008 ) (3,150 )
Others^(*)
   (636 ) (32 ) (520 ) (15,489 ) (210 ) 259


Ending balance
   (85,148 ) (77,962 ) (125,588 ) (324,258 ) (297,718 ) (390,045 )


   For the year ended December 31, 2017
   Consumers Corporates Credit card Others Total
Beginning balance
   (163,858 ) (1,498,842 ) (155,372 ) (209,024 ) (2,027,096 )
Net provision
   (131,275 ) (539,222 ) (203,968 ) 12,192 (862,273 )
Recoveries ofwritten-off loans
   (45,060 ) (84,413 ) (51,366 ) (68 ) (180,907 )
Charge-off
   142,099 453,249 228,640 63,181 887,169
Sales of loans and receivables
   898 65,145 — 29,186 95,229
Unwinding effect
   8,643 36,548 — — 45,191
Others
   908 211,729 1 (193 ) 212,445


Ending balance
   (187,645 ) (1,355,806 ) (182,065 ) (104,726 ) (1,830,242 )


   For the year ended December 31, 2019
   Credit card accounts Total
   Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance
   (64,787 ) (78,131 ) (116,772 ) (527,607 ) (476,118 ) (774,351 )
Transfer to12-month expected credit losses
   (15,712 ) 15,231 481 (88,679 ) 78,776 9,903
Transfer to lifetime expected credit losses
   6,031 (6,317 ) 286 28,268 (42,122 ) 13,854
Transfer to credit-impaired financial assets
   98,647 94,116 (192,763 ) 110,558 122,280 (232,838 )
Net reversal(provision) of allowance for credit losses
   (98,888 ) (96,434 ) (40,343 ) 9,479 (127,782 ) (261,939 )
Recovery
   — — (60,365 ) — — (188,638 )
Charge-off
   — — 281,420 — — 721,339
Disposal
   — — — — 1 44,858
Interest income from impaired loans
   — — — — — 27,534
Business combination (Note 44)
   — — — (9 ) (2,008 ) (3,150 )
Others^(*)
   (17 ) 2 14 (16,142 ) (240 ) (247 )


Ending balance
   (74,726 ) (71,533 ) (128,042 ) (484,132 ) (447,213 ) (643,675 )


(*)
Changes due to debt-equity swap, foreign currencies translation, and etc.
(7) Changes in the gross carrying amount of loans are as follows (Unit: Korean Won in millions):
   For the year ended December 31, 2018
   Consumers Corporates
   Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance
   103,502,347 5,487,758 326,739 131,096,396 4,466,354 1,622,409
Transfer to12-month expected credit losses
   1,921,485 (1,912,046 ) (9,439 ) 1,081,702 (1,077,895 ) (3,807 )
Transfer to lifetime expected credit losses
   (3,186,506 ) 3,199,993 (13,487 ) (2,275,984 ) 2,733,860 (457,876 )
Transfer to credit-impaired financial assets
   (218,943 ) (127,447 ) 346,390 (348,503 ) (275,189 ) 623,692
Charge-off
   — — (204,552 ) — — (290,109 )
Disposal
   — (478 ) (31,910 ) — (2,781 ) (166,347 )
Net increase (decrease)
   8,600,859 (619,771 ) (22,247 ) 1,900,116 (813,091 ) (307,304 )


Ending balance
   110,619,242 6,028,009 391,494 131,453,727 5,031,258 1,020,658


   For the year ended December 31, 2018
   Credit card accounts Total
   Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance
   5,721,743 935,266 177,983 240,320,486 10,889,378 2,127,131
Transfer to12-month expected credit losses
   221,984 (221,841 ) (143 ) 3,225,171 (3,211,782 ) (13,389 )
Transfer to lifetime expected credit losses
   (287,623 ) 288,027 (404 ) (5,750,113 ) 6,221,880 (471,767 )
Transfer to credit-impaired financial assets
   (104,459 ) (95,758 ) 200,217 (671,905 ) (498,394 ) 1,170,299
Charge-off
   — — (242,879 ) — — (737,540 )
Disposal
   — — — — (3,259 ) (198,257 )
Net increase (decrease)
   1,310,199 77,078 74,215 11,811,174 (1,355,784 ) (255,336 )


Ending balance
   6,861,844 982,772 208,989 248,934,813 12,042,039 1,621,141


   For the year ended December 31, 2019
   Consumers Corporates
   Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance
   110,619,242 6,028,009 391,494 131,453,727 5,031,258 1,020,658
Transfer to12-month expected credit losses
   2,626,998 (2,614,767 ) (12,231 ) 1,560,734 (1,550,164 ) (10,570 )
Transfer to lifetime expected credit losses
   (8,238,499 ) 8,256,600 (18,101 ) (2,306,186 ) 2,341,881 (35,695 )
Transfer to credit-impaired financial assets
   (152,128 ) (104,129 ) 256,257 (252,249 ) (142,902 ) 395,151
Charge-off
   — — (217,382 ) — — (222,537 )
Disposal
   — (55 ) (67,924 ) — (70 ) (161,318 )
Net increase (decrease)
   6,397,570 883,149 85,561 3,985,392 (809,566 ) (266,432 )
Business combination (Note 44)
   100 — — 2,561 40,161 21,000


Ending balance
   111,253,283 12,448,807 417,674 134,443,979 4,910,598 740,257


   For the year ended December 31, 2019
   Credit card accounts Total
   Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Beginning balance
   6,861,844 982,772 208,989 248,934,813 12,042,039 1,621,141
Transfer to12-month expected credit losses
   258,674 (258,166 ) (508 ) 4,446,406 (4,423,097 ) (23,309 )
Transfer to lifetime expected credit losses
   (307,100 ) 307,450 (350 ) (10,851,785 ) 10,905,931 (54,146 )
Transfer to credit-impaired financial assets
   (124,675 ) (104,712 ) 229,387 (529,052 ) (351,743 ) 880,795
Charge-off
   — — (281,420 ) — — (721,339 )
Disposal
   — — — — (125 ) (229,242 )
Net increase (decrease)
   589,724 (41,512 ) 72,269 10,972,686 32,071 (108,602 )
Business combination (Note 44)
   — — — 2,661 40,161 21,000


Ending balance
   7,278,467 885,832 228,367 252,975,729 18,245,237 1,386,298


(8) Details of other financial assets are as follows (Unit: Korean Won in millions):
   December 31,
2018 December 31,
2019
CMA accounts
   185,999 199,000
Receivables
   4,864,738 5,653,997
Accrued income
   1,002,964 1,012,240
Telex and telephone subscription rights and refundable deposits
   986,834 949,118
Other receivables
   514,055 456,010
Allowance for credit losses
   (67,941 ) (77,139 )


Total
   7,486,649 8,193,226


(9) Changes in the allowances for credit losses on other financial assets are as follows (Unit: Korean Won in millions):
   For the year ended December 31, 2018
   Stage 1 Stage 2 Stage 3 Total
Beginning balance
   (2,955 ) (1,832 ) (54,211 ) (58,998 )
Transfer to12-month expected credit losses
   (150 ) 139 11 —
Transfer to lifetime expected credit losses
   105 (416 ) 311 —
Transfer to credit-impaired financial assets
   6,509 304 (6,813 ) —
Net provision of allowance for credit losses
   (6,583 ) (166 ) (31,550 ) (38,299 )
Charge-off
   — — 28,200 28,200
Disposal
   — 1 1,264 1,265
Others
   (395 ) (1 ) 287 (109 )


Ending balance
   (3,469 ) (1,971 ) (62,501 ) (67,941 )


   For the year ended December 31, 2019
   Stage 1 Stage 2 Stage 3 Total
Beginning balance
   (3,469 ) (1,971 ) (62,501 ) (67,941 )
Transfer to12-month expected credit losses
   (207 ) 198 9 —
Transfer to lifetime expected credit losses
   116 (43 ) (73 ) —
Transfer to credit-impaired financial assets
   19 159 (178 ) —
Net reversal (provision) of allowance for credit losses
   802 (9 ) (6,854 ) (6,061 )
Charge-off
   — — 2,506 2,506
Disposal
   — — 1,685 1,685
Business combination (Note 44)
   (401 ) — (7,268 ) (7,669 )
Others
   (56 ) — 397 341


Ending balance
   (3,196 ) (1,666 ) (72,277 ) (77,139 )


(10) Changes in the gross carrying amount of other financial assets are as follows (Unit: Korean Won in millions):
   For the year ended December 31, 2018
   Stage 1 Stage 2 Stage 3 Total
Beginning balance
   6,662,335 29,124 79,912 6,771,371
Transfer to12-month expected credit losses
   7,573 (7,556 ) (17 ) —
Transfer to lifetime expected credit losses
   (11,418 ) 11,734 (316 ) —
Transfer to credit-impaired financial assets
   (7,580 ) (1,110 ) 8,690 —
Charge-off
   — — (28,201 ) (28,201 )
Disposal
   — (5 ) (1,640 ) (1,645 )
Net increase (decrease)
   803,480 (3,994 ) 13,579 813,065


Ending balance
   7,454,390 28,193 72,007 7,554,590


   For the year ended December 31, 2019
   Stage 1 Stage 2 Stage 3 Total
Beginning balance
   7,454,390 28,193 72,007 7,554,590
Transfer to12-month expected credit losses
   8,036 (8,019 ) (17 ) —
Transfer to lifetime expected credit losses
   (17,678 ) 17,740 (62 ) —
Transfer to credit-impaired financial assets
   (952 ) (918 ) 1,870 —
Charge-off
   — — (2,506 ) (2,506 )
Disposal
   — — (2,212 ) (2,212 )
Net increase
   606,457 55,651 41,138 703,246
Business combination (Note 44)
   9,591 — 7,656 17,247


Ending balance
   8,059,844 92,647 117,874 8,270,365


11. ~~THE~~
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

(1)
The fair value hierarchy
The fair value hierarchy is determined by the levels of judgment involved in estimating fair values of financial assets and liabilities. The specific financial instruments characteristics and ~~respective~~ market condition such as volume of transactions and transparency ~~of transactions between~~are reflected to the market ~~participants are considered when determining the classification of the inputs used in the valuations.~~observable inputs. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities. The Group maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value of its financial assets and financial liabilities. Fair value is measured based on the perspective of a
market participant. As such, even when market ~~information is~~assumptions are not readily available, the Group’s own assumptions reflect those ~~the Group believes a~~that market participants would use for measuring ~~those specific~~the assets or liabilities at the measurement date.
The fair value measurement is described in the one of the following three levels used to classify fair value measurements:

Level 1—fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The types of financial assets or liabilities generally included in Level 1 are publicly traded equity securities, derivatives, and debt securities ~~and derivatives.~~issued by governmental bodies.
Level 2—fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices). The types of financial assets or liabilities generally included in Level 2 are debt securities not traded in active markets and derivatives traded in OTC ~~of which valuation techniques do~~but not ~~require~~required significant judgment.
Level 3—fair value measurements are those derived from valuation ~~techniques~~technique that include ~~significant~~ inputs for the ~~asset~~assets or ~~liability~~liabilities that are not based on observable market data (unobservable inputs). The types of financial assets or liabilities generally included in Level 3 arenon-public securities and derivatives and debt securities of which valuation techniques require significant judgments and subjectivity.
~~types of financial assets or liabilities generally included in Level 3 arenon-publicly~~ ~~traded securities and derivatives and debt securities of which valuation techniques require significant judgments and subjectivity.~~
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Group’s assessment of the significance of a particular input to a fair value measurement in its entirety requires judgment and consideration of inherent factors ~~specific to~~of the asset or liability.
(2) Fair value hierarchy of financial assets and liabilities measured at fair value are as follows (Unit: Korean Won in millions):

   December 31, 2016
   Level 1^(*1)    Level 2^(*1)    Level 3^(*2)    Total
Financial assets:

Financial assets held for trading

Deposits
   26,180    —    —    26,180
Debt securities
   370,636    2,274,280    —    2,644,916
Equity securities
   35,983    —    —    35,983
Beneficiary certificates
   —    23,891    —    23,891
Loaned securities
   4,459    —    —    4,459
Derivative instrument assets
   3,233    2,871,909    23,153    2,898,295








Sub-total
   440,491    5,170,080    23,153    5,633,724








Financial assets designed at FVTPL

Debt securities
   —    —    4,348    4,348
Equity securities
   —    —    12,652    12,652








Sub-total
   —    —    17,000    17,000








AFS financial assets

Debt securities
   2,288,917    13,759,392    —    16,048,309
Equity securities
   428,678    —    1,024,935    1,453,613
Beneficiary certificates
   —    2,291,571    530,511    2,822,082
Loaned securities
   391,279    102,300    —    493,579








Sub-total
   3,108,874    16,153,263    1,555,446    20,817,583








Derivative assets
   —    140,478    99    140,577








Total
   3,549,365    21,463,821    1,595,698    26,608,884








Financial liabilities:

Financial liabilities held for trading

Deposits
   26,501    —    —    26,501
Derivative liabilities
   1,750    2,974,703    33,524    3,009,977








Sub-total
   28,251    2,974,703    33,524    3,036,478








Financial liabilities designated at FVTPL

Equity-linked securities
   —    197    673,709    673,906
Debentures
   —    92,974    —    92,974








Sub-total
   —    93,171    673,709    766,880








Derivative liabilities
   —    7,221    —    7,221








Total
   28,251    3,075,095    707,233    3,810,579








   December 31, 2017    December 31, 2018
   Level 1^(*1)    Level 2^(*1)    Level 3^(*2)    Total    Level 1^(*)    Level 2^(*)    Level 3    Total
Financial assets:

Financial assets held for trading

Financial assets at fair value through profit or loss mandatorily measured at fair value

Deposits
   25,972    —    —    25,972    26,935    —    —    26,935
Debt securities
   405,942    2,238,391    —    2,644,333    239,794    1,575,972    8,389    1,824,155
Equity securities
   21,666    —    —    21,666    53,806    —    401,860    455,666
Capital contributions
   —    —    422,614    422,614
Beneficiary certificates
   —    13,041    —    13,041    2,130    128,988    854,299    985,417
Derivative assets
   1,021    3,093,272    21,482    3,115,775
Loans
   —    205,000    180,450    385,450
Derivative assets (Designated for trading)
   13,216    1,964,065    48,798    2,026,079
















Sub-total
   454,601    5,344,704    21,482    5,820,787    335,881    3,874,025    1,916,410    6,126,316
















Financial assets designated at FVTPL

Financial assets at FVTOCI

Debt securities
   —    —    9,694    9,694    1,838,409    15,233,811    —    17,072,220
Equity securities
   —    —    12,596    12,596    482,327    —    468,847    951,174








Sub-total
   —    —    22,290    22,290








AFS financial assets

Debt securities
   2,710,172    10,348,815    —    13,058,987
Equity securities
   399,214    —    1,011,864    1,411,078
Beneficiary certificates
   —    68,722    643,906    712,628
Securities loaned
   69,778    100,478    —    170,256    —    40,029    —    40,029
















Sub-total
   3,179,164    10,518,015    1,655,770    15,352,949    2,320,736    15,273,840    468,847    18,063,423
















Derivative assets
   —    59,272    —    59,272
Derivative assets (Designated for hedging)
   —    35,503    —    35,503
















Total
   3,633,765    15,921,991    1,699,542    21,255,298    2,656,617    19,183,368    2,385,257    24,225,242
















Financial liabilities:

Financial liabilities held for trading

Deposits
   25,964    —    —    25,964
Derivative liabilities
   2,613    3,126,585    20,951    3,150,149
Securities sold
   —    —    —    —
Financial liabilities at fair value through profit or loss mandatorily measured at fair value

Deposits due to customers
   27,058    —    —    27,058
Derivative liabilities (Designated for trading)
   2,245    2,071,925    16,691    2,090,861
















Sub-total
   28,577    3,126,585    20,951    3,176,113    29,303    2,071,925    16,691    2,117,919
















Financial liabilities designated at FVTPL

Financial liabilities at fair value through profit or loss designated as upon initial recognition

Equity-linked securities
   —    —    160,057    160,057    —    —    164,767    164,767
Debentures
   —    91,739    —    91,739
















Sub-total
   —    91,739    160,057    251,796








Derivative liabilities
   —    67,754    —    67,754
Derivative liabilities (Designated for hedging)
   —    51,408    —    51,408
















Total
   28,577    3,286,078    181,008    3,495,663    29,303    2,123,333    181,458    2,334,094
















(*1))
There ~~was~~were no transfers between ~~level~~Level 1 and ~~level~~Level 2 of financial assets and liabilities measured at fair value. The Group recognizes transfers ~~between~~among levels at the end of reporting period in which events have occurred or conditions have changed.
~~(*2)~~ Certain AFS financial assets were measured at cost as of December 31, 2016 and 2017, that are amounting to 43,202 million Won and 37,092 million Won, respectively. These unquoted equity instruments mostly represent minority investments in special purpose entity vehicles such as asset securitization structures. They are measured at cost because (a) observable inputs of financial information to measure fair value was not available to obtain, or (b) there is a significant variance in likely estimated cash flows or (c) the probabilities for the various estimated cash flows could not be measured reliably. In addition, there were no indicators of impairments in these investments and the Group has no intention to dispose these investments in the foreseeable future.
   December 31, 2019
   Level 1^(*)    Level 2^(*)    Level 3    Total
Financial assets:

Financial assets at fair value through profit or loss mandatorily measured at fair value

Deposits
   27,901    —    —    27,901
Debt securities
   420,330    1,910,929    5,826    2,337,085
Equity securities
   157,895    1,834    528,621    688,350
Capital contributions
   —    —    515,199    515,199
Beneficiary certificates
   1    90,498    1,275,734    1,366,233
Loans
   —    59,844    152,629    212,473
Derivative assets (Designated for trading)
   3,057    2,893,798    25,048    2,921,903








Sub-total
   609,184    4,956,903    2,503,057    8,069,144








Financial assets at FVTOCI

Debt securities
   2,146,163    24,568,261    —    26,714,424
Equity securities
   441,672    —    493,698    935,370
Securities loaned
   —    80,737    —    80,737








Sub-total
   2,587,835    24,648,998    493,698    27,730,531








Derivative assets (Designated for hedging)
   —    121,131    —    121,131








Total
   3,197,019    29,727,032    2,996,755    35,920,806








Financial liabilities:

Financial liabilities at fair value through profit or loss mandatorily measured at fair value

Deposits due to customers
   27,530    —    —    27,530
Derivative liabilities (Designated for trading)
   4,336    2,766,771    72,039    2,843,146








Sub-total
   31,866    2,766,771    72,039    2,870,676








Financial liabilities at fair value through profit or loss designated as upon initial recognition

Equity-linked securities
   —    —    87,626    87,626








Derivative liabilities (Designated for hedging)
   —    6,516    321    6,837








Total
   31,866    2,773,287    159,986    2,965,139








During the year, the Group disposed of certain financial assets which were carried at cost because they did not have quoted market prices in an active market and could not be reliably measured at fair value. The carrying amount and gain from disposal of these financial assets amounted to 1,266 million Won and 657 million Won for the year ended December 31, 2017, respectively.
(*)
There were no transfers between Level 1 and Level 2 of financial assets and liabilities measured at fair value. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.
Financial assets and liabilities ~~designated~~ at ~~FVTPL,held-for-trading~~fair value through profit or loss, financial assets ~~and liabilities, AFS financial assets,~~at FVTOCI, and derivative assets (Designated for hedging) and liabilities (Designated for hedging) are recognized at fair value. Fair value is the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
Financial instruments are measured at fair value using a quoted market price in active markets. If there is no active market for a financial instrument, the Group determines the fair value using ~~alternative assumptions~~valuation methods. Valuation methods and ~~developing fair value measurement methods. Alternative assumptions and fair value measurement methods~~input variables for each type of financial instruments are as follows:
1) Valuation methods and input variables for each type of financial instrument classified into level 2 in December 31, 2018 and 2019 are as follows:


~~Fair value measurement~~Valuation methods

Input variables
Loans The fair value is measured by discounting the projected cash flows of loan products by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the debtor. Risk-free market rate, Credit spread
Debt securities and Securities loaned Fair value is measured by discounting the future cash flows of debt securities applying the risk-free market rate. Risk-free market rate, Credit spread
Beneficiary certificates The beneficiary certificates classified as Level 2 are MMF and are measured at base price. Base price
Derivatives The fair value is measured through option model (Closed Form), DCF Model, FDM, Monte Carlo Simulation and etc. Market rate, foreign exchange rate, stock prices and value of underlying assets, volatility, and etc.
2) Valuation methods and input variables for each type of financial instrument classified into level 3 in December 31, 2018 and 2019 are as follows:
Valuation methods
Input variables
Loans The fair value of Loans is measured by the Binomial tree given the values of underlying assets and volatility. Values of underlying assets, Volatility
Debt securities    The fair value is measured by discounting the projected cash flows of debt securities by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the issuers of the securities.    Risk-free market rate, ~~credit~~Credit spread
Equity securities, capital contributions and Beneficiary certificates    Among DCF (Discounted Cash Flow) Model, FCFE (Free Cash Flow to Equity) Model, Comparable Company Analysis, Dividend Discount Model, Risk-adjusted Rate of Return Method, and Net Asset Value Method, more than one method is used given the characteristic of the subject of fair value measurement.    Risk-free market rate, market risk premium, corporate Beta, etc.
Derivatives
~~Thein-house~~ ~~developed model which~~Fair value is ~~based on the models that are used~~measured by ~~market participants in the valuation of general OTC derivative products, such as options, interest rate swaps, currency swap and currency forward that are based on inputs observable in the market.~~
However, for some complicated financial instruments of which valuation should be based on some assumptions since some significant or all inputs to be used in the model are not observable in the market, the~~in-house~~ ~~derived model which is developed from the general valuation~~ models such as ~~Finite Difference Method (“FDM”) or~~option model (Closed form), DCF model, FDM and Monte Carlo Simulation.
   ~~Risk-free market~~Market rate, ~~forward rate, volatility,~~values of underlying assets such as foreign exchange rate and stock prices, volatility, etc.
Equity-linked securities    ~~The fair~~Fair value ~~of security linked to stock prices or derivatives~~ is measured by ~~the~~ models such as option model (Closed form), DCF model, FDM orand Monte Carlo ~~Simulation given the~~Simulation.    Values of underlying assets,~~risk-free~~ ~~market rate,~~ market rate, dividend, ~~and convenience yield,~~ volatility, correlation coefficient and foreign exchange rate, etc.
~~Fair value measurement methods~~
~~Input variables~~
~~natures of the securities or underlying assets.~~ ~~coefficient, credit spread, and foreign exchange rate~~
~~Debentures~~ ~~The fair value is measured by discounting the projected cash flows of a debenture by applying the market discount rate that is reflecting credit rating of the Group.~~ ~~Risk-free market rate, forward rate~~
Valuation methods of financial assets and liabilities measured at fair value and classified into Level 3 and significant but unobservable inputs are as follows:


Fair value

measurement

technique
Type
Input variable

Range

Impact of changes in significant
unobservable
inputs on fair value
measurement
Loans Binomial tree,
DCF Stock, Volatility of underlying asset 14.50%~46.06% Variation of fair value as volatility of underlying asset increases.
Derivative assets
Option
valuation
model and
others

~~Correlation coefficient~~
Interest rate
related    ~~0.900~0.980~~Correlation coefficient
0.90~0.98
Variation of fair value increases as correlation coefficient increases.

Volatility of underlying asset
   ~~12.1%~~16.30%~~~28.1%~~41.20%
Variation of fair value increases as volatility increases.
~~Derivative liabilities~~ Equity
related
~~Option valuation model and others~~
Correlation coefficient
~~Correlation coefficient~~
0.237~0.675    ~~0.900~0.980~~
Variation of fair value increases as correlation coefficient increases.
   DCF model
Currency
related Credit risk adjustment ratio 7.70%~100.00% Variation of fair value increases as credit risk adjustment ratio increases.
Derivative liabilities Option
valuation
model and
others Interest rate
related Correlation coefficient 0.90~0.98 Variation of fair value increases as correlation coefficient increases.
Volatility of underlying asset
   ~~12.1%~~16.30%~~~28.1%~~41.20%
Variation of fair value increases as volatility increases.
Equity ~~linked~~
related Correlation coefficient 0.237~0.675 Variation of fair value increases as correlation coefficient increases.
Volatility of underlying 21.40%~22.40% Variation of fair value increases as volatility increases.
Equity-linked securities
Monte Carlo
Simulation
and others

~~Correlation coefficient~~
   ~~0.363~0.694~~Correlation coefficient
~~Equity linked~~0.294~0.675
Equity-linked securities’ variation of fair value increases if both volatility and correlation coefficient increase. However, when correlation coefficient decreases despite the increase in volatility, the variation of fair value of ~~equity linked securities~~a compound financial instrument may decrease.
~~Volatility of underlying asset~~
~~6.8%~58.9%~~
~~Equity securities and Beneficiary certificates~~
~~External appraisal value and others~~
~~Expected growth rate~~
~~0.0%~1.0%~~
~~Fair value increases as expected growth rate increases.~~
~~Volatility of real estate sale price~~
0%
~~Fair value increases as sale price~~
~~Increases~~

~~Discount rate of lease cash flow and others~~
   ~~8.31%~8.54%~~Volatility of underlying asset
19.10%~25.30%
Equity securities, capital contributions, debt securities, and beneficiary certificates External
appraisal
value and
others Terminal growth rate 0.00%~ 9.15% Fair value increases as terminal growth rate increases.
Discount rate 0.35%~19.21% Fair value increases as discount rate decreases.
Volatility of ~~lease cash flow decreases~~
real estate sale price 0.00 Fair value increases as real estate sale price increases.
Volatility of underlying assets 13.21%~52.48% Variation of fair value increases as volatility of underlying assets increases
Fair value of financial assets and liabilities classified into ~~level~~Level 3 is measured by the Group using its own valuation ~~techniques~~methods or using external specialists. Unobservable inputs used in the fair value measurements are produced by the internal system of the Group and the appropriateness of inputs is reviewed regularly.
(3) Changes in financial assets and liabilities measured at fair value classified into ~~level~~Level 3 are as follows (Unit: Korean Won in millions):

For the year ended December 31, 2015
January 1,
2015 Net
Income
(loss)^(*1) Other
comprehensive
income (loss) Purchases/
Issuances Disposals/
Settlements Transfer to or
from level 3^(*2) December 31,
2015
Financial assets:

Financial assets held for trading

Derivatives instruments assets^(*5)
49,274 71,703 — (8,166 ) (33,156 ) (979 ) 78,676

Sub-total
49,274 71,703 — (8,166 ) (33,156 ) (979 ) 78,676

Financial assets designed at FVTPL

Equity-linked securities
6,066 — — — (6,066 ) — —
Debt securities
— (14 ) — 1,000 — — 986
Equity securities
10,567 1,042 — — — — 11,609

Sub-total
16,633 1,028 — 1,000 (6,066 ) — 12,595

AFS financial assets

Equity securities^(*3)
1,031,918 (57,373 ) 105,290 105,930 (100,018 ) (92,379 ) 993,368
Beneficiary certificates
355,694 3,905 (24,846 ) 121,613 (79,296 ) — 377,070
Others
14,241 (7,064 ) 1,370 — (3,239 ) — 5,308

Sub-total
1,401,853 (60,532 ) 81,814 227,543 (182,553 ) (92,379 ) 1,375,746

Derivative assets
11,946 7,375 — — (13,348 ) — 5,973

Total
1,479,706 19,574 81,814 220,377 (235,123 ) (93,358 ) 1,472,990

Financial liabilities:

Financial liabilities held for trading

Derivative liabilities^(*5)
41,711 58,565 — 4,008 (24,475 ) (1,202 )- 78,607
Financial liabilities designated at FVTPL

Equity-linked securities^(*4)
361,993 (73,533 ) — 764,005 (304,917 ) (197 ) 747,351

Total
403,704 (14,968 ) — 768,013 (329,392 ) (1,399 ) 825,958

For the year ended December 31, 2016
January 1,
2016 Net
Income
(loss)^(*1) Other
comprehensive
income (loss) Purchases/
Issuances Disposals/
Settlements Transfer to or
from level 3^(*2) December 31,
2016
Financial assets:

Financial assets held for trading

Derivative instrument
assets^(*6)
78,676 (29,117 ) — 13,640 (39,506 ) (540 ) 23,153

Financial assets designed at FVTPL

Debt securities
986 (161 ) — 4,509 (986 ) — 4,348
Equity securities
11,609 1,043 — — — — 12,652

Sub-total
12,595 882 — 4,509 (986 ) — 17,000

AFS financial assets

Equity securities^(*3)
993,368 (6,986 ) 57,323 205,749 (205,348 ) (19,171 ) 1,024,935
Beneficiary certificates
377,070 (868 ) 5,794 174,024 (25,509 ) — 530,511
Others
5,308 594 (643 ) — (5,259 ) — —

Sub-total
1,375,746 (7,260 ) 62,474 379,773 (236,116 ) (19,171 ) 1,555,446

Derivative assets
5,973 3,877 — — (9,751 ) — 99

Total
1,472,990 (31,618 ) 62,474 397,922 (286,359 ) (19,711 ) 1,595,698

Financial liabilities:

Financial liabilities held for trading Derivative liabilities
78,607 (8,322 ) — 1,155 (37,916 ) — 33,524
Financial liabilities designated at FVTPL

Equity-linked securities
747,351 71,079 — — (144,721 ) — 673,709

Total
825,958 62,757 — 1,155 (182,637 ) — 707,233

For the year ended December 31, 2017 For the year ended December 31, 2017
January 1,
2017 Net
Income
(loss)^(*1) Other
comprehensive
income Purchases/
Issuances Disposals/
Settlements Transfer to or
out of level 3^(*2) December 31,
2017 January 1,
2017 Net
Income
(loss)^(*1) Other
comprehensive
income
(loss) Purchases/
Issuances Disposals/
Settlements Transfer to or
out of level 3^(*2) December 31,
2017
Financial assets:

Financial assets held for trading

Derivative assets
23,153 22,362 — 1,398 (25,431 ) — 21,482 23,153 22,362 — 1,398 (25,431 ) — 21,482

Financial assets designated at FVTPL

Financial assets designed at FVTPL

Debt securities
4,348 346 — 5,000 — — 9,694 4,348 346 — 5,000 — — 9,694
Equity securities
12,652 (56 ) — — — — 12,596 12,652 (56 ) — — — — 12,596

Sub-total
17,000 290 — 5,000 — — 22,290 17,000 290 — 5,000 — — 22,290

AFS financial assets

Equity securities
1,024,935 27,986 24,442 65,961 (131,460 ) — 1,011,864 1,024,935 27,986 24,442 65,961 (131,460 ) — 1,011,864
Beneficiary certificates
530,511 212 (4,321 ) 226,975 (109,471 ) — 643,906 530,511 212 (4,321 ) 226,975 (109,471 ) — 643,906

Sub-total
1,555,446 28,198 20,121 292,936 (240,931 ) — 1,655,770 1,555,446 28,198 20,121 292,936 (240,931 ) — 1,655,770

Derivative assets
99 329 — — (428 ) — — 99 329 — — (428 ) — —

Total
1,595,698 51,179 20,121 299,334 (266,790 ) — 1,699,542 1,595,698 51,179 20,121 299,334 (266,790 ) — 1,699,542

Financial liabilities:

Financial liabilities held for trading

Derivative liabilities
33,524 24,866 — 500 (37,939 ) — 20,951 33,524 24,866 — 500 (37,939 ) — 20,951

Financial liabilities designated at FVTPL

Financial liabilities designated as at FVTPL

Equity-linked securities
673,709 112,015 — — (625,667 ) — 160,057 673,709 112,015 — — (625,667 ) — 160,057

Total
707,233 136,881 — 500 (663,606 ) — 181,008 707,233 136,881 — 500 (663,606 ) — 181,008

(*1) ~~From~~
The losses that increase financial ~~assets~~liabilities are presented as positive amounts, and the gains that decrease financial liabilities ~~classified~~are presented as ~~Level 3 that the Group holds as at the end of the year, losses of 2,854 million Won, 94,238 million Won and~~negative amounts. The loss amounting to 34,621 million Won for the year ended December 31, ~~2015, 2016~~2017, which is from financial assets and ~~2017, respectively, were~~liabilities that the Group holds, has been recognized in net gain (loss) on financial instruments at FVTPL and net gain (loss) on AFS financial assets in the statement of comprehensive ~~income statements.~~income.
(*2)
The Group recognizes transfers between levels at the end of reporting period within which events have occurred or conditions have changed.
For the year ended December 31, 2018
January 1,
2018 Net
Income
(loss)^(*1) Other
comprehensive
income Purchases/
issuances Disposals/
settlements Transfer to or
out of Level 3^(*2) December 31,
2018
Financial assets:

Financial assets at fair value through profit or loss mandatorily measured at fair value

Debt securities
9,694 (28 ) — 3,000 (4,277 ) — 8,389
Equity securities
280,171 56,271 — 67,953 (2,535 ) — 401,860
Capital contributions
294,121 16,119 — 144,207 (31,833 ) — 422,614
Beneficiary certificates
654,066 16,391 — 5,151,535 (4,971,003 ) 3,310 854,299
Loans
165,001 3,378 — 150,103 (138,032 ) — 180,450
Derivative assets
19,346 75,696 — 4,722 (50,966 ) — 48,798

Sub-total
1,422,399 167,827 — 5,521,520 (5,198,646 ) 3,310 1,916,410

Financial assets at FVTOCI

Equity securities
451,287 — 19,688 432 (2,560 ) — 468,847

Total
1,873,686 167,827 19,688 5,521,952 (5,201,206 ) 3,310 2,385,257

Financial liabilities:

Financial liabilities at fair value through profit or loss mandatorily measured at fair value

Derivative liabilities
20,951 46,409 — 255 (50,921 ) (3 ) 16,691
Financial liabilities at fair value through profit or loss designated as upon initial recognition

Equity-linked securities
160,057 (16,243 ) — 183,039 (162,086 ) — 164,767

Total
181,008 30,166 — 183,294 (213,007 ) (3 ) 181,458

(*1)
The losses that increase financial liabilities are presented as positive amounts, and the gains that decrease financial liabilities are presented as negative amounts. The gain amounting to 137,777 million Won for the years ended December 31, 2018, which is from financial assets and liabilities that the Group holds as at the end of the periods, has been recognized in net gain (loss) on financial assets at FVTPL and net gain (loss) on financial assets at FVTOCI in the consolidated statement of comprehensive income.
(*3)2) ~~AFS~~
The Group recognizes transfers between levels at the end of reporting period within which events have occurred or conditions have changed.
For the year ended December 31, 2019
January 1,
2019 Business
combination Net Income
(loss)^(*1) Other
comprehensive
income Purchases/
issuances Disposals/
settlements Transfer to or
out Level 3^(*2) December 31,
2019
Financial assets:

Financial assets at fair value through profit or loss mandatorily measured at fair value
—
Debt securities
8,389 — 476 — 2,000 (5,039 ) — 5,826
Equity securities
401,860 — 59,537 — 95,511 (28,287 ) — 528,621
Capital contributions
422,614 707 (13,270 ) — 173,064 (67,916 ) — 515,199
Beneficiary certificates
854,299 — 18,450 — 578,228 (183,684 ) 8,441 1,275,734
Loans
180,450 — 6,854 — 60,696 (95,371 ) — 152,629
Derivative assets
48,798 — 16,935 — 1,115 (40,343 ) (1,457 ) 25,048

Sub-total
1,916,410 707 88,982 — 910,614 (420,640 ) 6,984 2,503,057

Financial assets at FVTOCI

Equity securities
468,847 1,408 — 23,063 687 (306 ) (1 ) 493,698

Total
2,385,257 2,115 88,982 23,063 911,301 (420,946 ) 6,983 2,996,755

Financial liabilities:

Financial liabilities at fair value through profit or loss mandatorily measured at fair value

Derivative liabilities (Designated for trading)
16,691 — 84,033 — (11,140 ) (14,817 ) (2,728 ) 72,039
Financial liabilities at fair value through profit or loss designated as upon initial recognition

Equity-linked securities
164,767 — 33,237 — 1,809 (112,187 ) — 87,626
Derivatives liabilities (designated for hedging)
— — — — 321 — — 321

Total
181,458 — 117,270 — (9,010 ) (127,004 ) (2,728 ) 159,986

(*1)
The losses that increase financial liabilities are presented as positive amounts, and the gains that decrease financial liabilities are presented as negative amounts. The loss amounting to 21,809 million Won for the years ended December 31, 2019, which is from financial assets ~~were transferred out of level 1 to level 3 upon~~and liabilities that the ~~change~~Group holds as at the end of the ~~fair value measurement method of the~~periods, has been recognized in net gain (loss) on financial assets ~~by using market the external valuation specialists from previously using quoted prices~~at FVTPL and net gain (loss) on financial assets at FVTOCI in the ~~active market, in the opposite case, they were transferred out~~consolidated statement of ~~level 3 to level 1.~~comprehensive income.
(*4)2) ~~Since~~
The Group recognizes transfers between levels at the ~~observable market data for equity-linked securities was available, such securities were transferred out~~end of ~~Level 3 into Level 2.~~reporting period within which events have occurred or conditions have changed.
~~(*5)~~ ~~As the variables used for the valuation of interest rate and equity related derivatives became observable in the market, such derivatives were transferred out of Level 3 to Level 2.~~
~~(*6)~~ ~~As the variables used for the valuation of currency related derivatives became observable in the market, such derivatives were transferred out of Level 3 to Level 2.~~
4)
(4) Sensitivity analysis on the unobservable inputs used for measuring ~~level~~Level 3 financial ~~instruments.~~instruments
The sensitivity analysis of the financial instruments has been performed by classifying with favorable and unfavorable changes based on how changes in unobservable assumptions would have effects on the fluctuations of financial instruments’ value. When the fair value of a financial instrument is affected by more than one unobservable assumption, the below table reflects the most favorable or the most unfavorable changes which resulted from varying the assumptions individually. The sensitivity analysis was performed for two types of level 3 financial instruments: (1) ~~debt securities, equity securities,~~ interest rate related derivatives, currency related derivatives, equity related derivatives, ~~and~~ equity-linked securities beneficiary certificates and loans of which fair value changes are recognized as
net income; (2) equity securities ~~and beneficiary certificates~~ of which fair value changes are recognized as other comprehensive income. ~~Equity securities~~
Among the financial instruments that are classified as ~~level~~Level 3 ~~but measured at costs~~amounting to 2,566,715 million Won and 3,156,741 million Won as of December 31, 2018 and 2019 respectively, equity instruments of 1,641,875 million Won and 2,194,320 million Won that are considered to provide the best estimate of fair value are excluded from the sensitivity analysis.
The following table ~~shows~~presents the sensitivity analysis to disclose the effect of reasonably possible volatility on the fair value of a ~~level~~Level 3 financial instruments ~~for the years ended December 31, 2015, 2016 and 2017.~~ (Unit: Korean Won in millions):

   For the year ended December 31, 2015
   Net income
(loss) Other comprehensive
income (loss)
   Favorable    Unfavorable Favorable    Unfavorable
Financial assets:

Financial assets held for trading

Derivatives instruments assets^(*1)(*2)
   10,674    (9,729 ) —    —
Financial assets designed at FVTPL

Equity securities^(*6)
   793    (739 ) —    —
AFS Financial Assets

Equity securities^(*3)(*4)
   —    — 37,648    (20,869 )
Beneficiary certificates^(*4)
   —    — 4,102    (3,875 )
Others^(*5)
   —    — 80    (80 )






Total
   11,467    (10,468 ) 41,830    (24,824 )






Financial liabilities:

Financial liabilities held for trading

Derivative liabilities^(*1)(*2)
   13,469    (12,281 ) —    —
Financial liabilities designated at FVTPL

Equity-linked securities^(*1)
   2,289    (2,247 ) —    —






Total
   15,758    (14,528 ) —    —






   For the year ended December 31, 2016
   Net income
(loss) Other comprehensive
income (loss)
   Favorable    Unfavorable Favorable    Unfavorable
Financial assets:

Financial assets held for trading

Derivatives instruments assets^(*1)(*2)
   861    (2,248 ) —    —
Financial assets designed at FVTPL

Debt securities⁽^*6)
   19    (18 ) —    —
Equity securities^(*6)
   688    (639 ) —    —
AFS Financial Assets

Equity securities^(*3)(*4)
   —    — 31,412    (18,551 )
Beneficiary certificates^(*4)
   —    — 2,903    (2,571 )






Total
   1,568    (2,905 ) 34,315    (21,122 )






Financial liabilities:

Financial liabilities held for trading

Derivative liabilities^(*1)(*2)
   4,892    (3,568 ) —    —
Financial liabilities designated at FVTPL

Equity-linked securities^(*1)
   905    (857 ) —    —






Total
   5,797    (4,425 ) —    —






   For the year ended December 31, 2017
   Net income
(loss) Other comprehensive
income (loss)
   Favorable    Unfavorable Favorable    Unfavorable
Financial assets:

Financial assets held for trading

Derivatives instruments assets^(*1)(*2)
   1,234    (526 ) —    —
Financial assets designed at FVTPL

Debt securities^(*6)
   265    (309 ) —    —
Equity securities^(*6)
   670    (624 ) —    —
AFS Financial Assets

Equity securities^(*3)(*4)
   —    — 28,583    (15,246 )
Beneficiary certificates^(*4)
   —    — 1,861    (1,857 )






Total
   2,169    (1,459 ) 30,444    (17,103 )






Financial liabilities:

Financial liabilities held for trading

Derivative liabilities^(*1)(*2)
   5    (513 ) —    —
Financial liabilities designated at FVTPL

Equity-linked securities^(*1)
   8    (7 ) —    —






Total
   13    (520 ) —    —






   December 31, 2017
   Net income
(loss) Other comprehensive
income (loss)
   Favorable    Unfavorable Favorable    Unfavorable
Financial assets:

Financial assets held for trading

Derivative assets (*1)
   1,234    (526 ) —    —
Financial assets designated as at FVTPL

Debt securities (*4)
   265    (309 ) —    —
Equity securities (*4)
   670    (624 ) —    —
AFS Financial assets

Equity securities (*2)(*3)
   —    — 28,583    (15,246 )
Beneficiary certificates (*3)
   —    — 1,861    (1,857 )






Total
   2,169    (1,459 ) 30,444    (17,103 )






Financial liabilities:

Financial liabilities held for trading

Derivative liabilities (*1)
   5    (513 ) —    —
Financial liabilities designated as at FVTPL

Equity-linked securities (*1)
   8    (7 ) —    —






Total
   13    (520 ) —    —






(*1)
Fair value changes of equity related derivative assets and liabilities and equity-linked securities are calculated by increasing or decreasing historical volatility of the stock price and correlation, which are major unobservable variables, by 10%, respectively. In the case of interest rate related derivative assets and liabilities, fair value changes are calculated by increasing or decreasing the volatility of interest rate, which are major unobservable variables, by 10%.
(*2)
Fair value changes of equity securities are calculated by increasing or decreasing growth rate (0~1%) and discount rate or liquidation value(-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.
(*3)
Even if the sensitivity analysis of the capital contributions and beneficiary certificates is not possible in practice, fair value changes of beneficiary certificates and other securities whose major unobservable variables are composed of the real estate are calculated by increasing or decreasing price fluctuation of real estate which is underlying assets and discount rate by 1%.
(*4)
Changes of fair value are measured by increasing or decreasing the discount rate by 10%, which is major unobservable variable, respectively.
   December 31, 2018
   Net income
(loss) Other comprehensive
income (loss)
   Favorable    Unfavorable Favorable    Unfavorable
Financial assets:

Financial assets at fair value through profit or loss mandatorily measured at fair value

Derivative assets^(*1)
   4,578    (4,352 ) —    —
Loans
   146    (127 ) —    —
Debt securities
   68    (35 ) —    —
Equity securities^(*2)(*3)
   12,700    (9,165 ) —    —
Beneficiary certificates^(*3)
   1,582    (1,582 ) —    —
Financial assets at FVTOCI

Equity securities^(*2)(*3)
   —    — 23,798    (10,078 )






Total
   19,074    (15,261 ) 23,798    (10,078 )






Financial liabilities:

Financial liabilities at fair value through profit or loss mandatorily measured at fair value

Derivative liabilities^(*1)
   2,433    (2,751 ) —    —
Financial liabilities at fair value through profit or loss designated as upon initial recognition

Equity-linked securities^(*1)
   1,561    (1,669 ) —    —






Total
   3,994    (4,420 ) —    —






(*1)
Fair value changes of equity related derivatives assets and liabilities and equity-linked securities are calculated by increasing or decreasing historical volatility of the stock price and correlation, which are major unobservable variables, by 10%, respectively. In the case of interest rate related derivative assets and liabilities, fair value changes are calculated by increasing or decreasing the volatility of interest rate, which are major unobservable variables, by 10%~~, respectively.~~.
(*2) ~~Both derivative assets and liabilities for held for trading and hedging are included.~~
~~(*3)~~
Fair value changes of equity securities are calculated by increasing or decreasing growth rate (0~1%) and discount rate or liquidation value(-1~1%). ~~and discount rate.~~ The growth rate, discount rate, and liquidation value are major unobservable variables.
(*4)3) ~~Among the equity securities, whereas~~
Even if the sensitivity analysis of the capital contributions and beneficiary certificates is not possible in practice, fair value changes of ~~such~~beneficiary certificates and other securities whose major unobservable variables are composed of the real estate are calculated by increasing or decreasing price fluctuation of real estate which is underlying assets and discount rate by 1%.
   December 31, 2019
   Net income
(loss) Other comprehensive
income (loss)
   Favorable    Unfavorable Favorable    Unfavorable
Financial assets:

Financial assets at fair value through profit or loss mandatorily measured at fair value

Derivative assets^(*1)
   640    (935 ) —    —
Loans^(*2)
   152    (128 ) —    —
Debt securities
   652    (640 ) —    —
Equity securities^(*3)(*4)
   16,104    (10,929 ) —    —
Beneficiary certificates^(*4)
   1,125    (1,125 ) —    —
Financial assets at FVTOCI

Equity securities^(*3)(*4)
   —    — 26,380    (11,981 )






Total
   18,673    (13,757 ) 26,380    (11,981 )






Financial liabilities:

Financial liabilities at fair value through profit or loss mandatorily measured at fair value

Derivative liabilities^(*1)
   1,054    (816 ) —    —
Financial liabilities at FVTPL designated as upon initial recognition

Equity-linked securities^(*1)
   136    (142 ) —    —






Total
   1,190    (958 ) —    —






(*5)1)
Fair value changes of equity related derivatives assets and liabilities and equity-linked securities are calculated by increasing or decreasing historical volatility of the stock price and correlation, which are major unobservable variables, by 10%, respectively. In the case of interest rate related derivative assets and liabilities, fair value changes are calculated by increasing or decreasing the volatility of interest rate, which are major unobservable variables, by 10%.
(*2)
Fair value changes of equity securities are calculated by increasing or decreasing stock prices(-10%~10%) and volatility(-10~10%) and discount rate. The stock prices, volatility, and discount rate are major unobservable variables.
(*3)
Fair value changes of equity securities are calculated by increasing or decreasing growth rate (0~1%) and discount rate(-1~1%) or liquidation value(-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.
(*4)
Even if the sensitivity analysis of the capital contributions and beneficiary certificates is not possible in practice, fair value changes of beneficiary certificates and other securities whose major unobservable variables are composed of the real estate are calculated by increasing or decreasing price fluctuation of ~~trust property or~~ real estate which is underlying assets and discount rate by 1%. ~~The prices of trust property and real estates and discount rate are major unobservable variables.~~
~~(*6)~~ ~~Fair value changes are measured by increasing or decreasing the discount rate by 10%, which is major unobservable variable, respectively.~~
(5) Fair value and carrying amount of financial assets and liabilities that are recorded at amortized cost are as follows (Unit: Korean Won in millions):

   As of December 31, 2016    December 31, 2018
   Fair value    Book
value    Fair value    Book
value
   Level 1    Level 2    Level 3    Total       Level 1    Level 2    Level 3    Total
Financial assets:

Held-to-maturity financial assets
   741,880    13,243,297    —    13,985,177    13,910,251
Loans and receivables
   —    —    259,565,952    259,565,952    258,392,633
Securities at amortized cost
   3,618,213    19,417,130    —    23,035,343    22,932,559
Loans and other financial assets at amortized cost
   —    —    282,342,760    282,342,760    282,457,578
Financial liabilities:

Deposits due to customers
   —    221,001,466    —    221,001,466    221,020,411    —    248,763,952    —    248,763,952    248,690,939
Borrowings
   —    18,785,325    —    18,785,325    18,769,515    —    16,203,070    —    16,203,070    16,202,986
Debentures
   —    24,004,668    —    24,004,668    23,565,449    —    28,765,251    —    28,765,251    28,735,862
Other financial liabilities
   —    21,984,171    —    21,984,171    21,985,086    —    21,461,397    —    21,461,397    21,442,524

   As of December 31, 2017    December 31, 2019
   Fair value    Book
value    Fair value    Book
value
   Level 1    Level 2    Level 3    Total       Level 1    Level 2    Level 3    Total
Financial assets:

Held-to-maturity financial assets
   1,206,292    15,509,387    —    16,715,679    16,749,296
Loans and receivables
   —    —    265,570,649    265,570,649    267,106,204
Securities at amortized cost
   3,123,898    17,378,920    —    20,502,818    20,320,539
Loans and other financial assets at amortized cost
   25,902    54,507    283,058,699    283,139,108    293,711,693
Financial liabilities:

Deposits due to customers
   —    234,682,775    —    234,682,775    234,695,084    —    264,909,974    —    264,909,974    264,685,578
Borrowings
   —    14,754,506    —    14,754,506    14,784,706    —    18,919,018    —    18,919,018    18,998,920
Debentures
   —    27,889,781    —    27,889,781    27,869,651    —    31,173,189    —    31,173,189    30,858,055
Other financial liabilities
   —    13,890,789    —    13,890,789    13,892,461    —    17,693,559    —    17,693,559    17,706,767
The fair values of financial instruments are measured using quoted market price in active markets. In case there is no active market for financial instruments, the Group determines the fair value by using ~~alternative assumptions through developing fair value measurement~~valuation methods. ~~Alternative assumptions~~Valuation methods and ~~fair value measurement methods~~input variables for financial assets and liabilities that are measured at amortized ~~costs~~cost are given as follows:


~~Fair value measurement technique~~Valuation methods

Input variables
~~Debt securities~~Securities at amortized cost
   The fair value is measured by discounting the projected cash flows of debt securities by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the issuers of the securities.    Risk-free market rate, ~~and~~ credit spread, prepayment rate, etc.
Loans and ~~receivables~~other financial assets at amortized cost
   The fair value is measured by discounting the projected cash flows of loan products by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the debtor.    Risk-free market rate, credit spread, ~~and prepayment-rate~~prepayment rate, etc.
~~Deposit~~Deposits due to customers, borrowings, debentures and other financial liabilities
   The fair value is measured by discounting the projected cash flows of debt products by applying the market discount rate that is reflecting credit rating of the Group.    Risk-free market rate, ~~and~~ forward rate, etc.
(6) Financial instruments by category
Carrying amounts of financial assets and liabilities by each category are as follows (Unit: Korean Won in millions):
   December 31, 2018
Financial assets
   Financial asset
at FVTPL    Financial assets
at FVTOCI    Financial assets
at amortized cost    Derivatives
assets
(Designated for
hedging)    Total
Deposits
   26,935    —    14,151,012    —    14,177,947
Securities
   3,687,852    18,063,423    22,932,559    —    44,683,834
Loans
   385,450    —    260,819,917    —    261,205,367
Derivative assets
   2,026,079    —    —    35,503    2,061,582
Other financial assets
   —    —    7,486,649    —    7,486,649










Total
   6,126,316    18,063,423    305,390,137    35,503    329,615,379










   December 31, 2018
Financial liabilities
   Financial liabilities
at FVTPL    Financial liabilities
at amortized cost    Derivatives
liabilities
(Designated for
hedging)    Total
Deposits due to customers
   27,058    248,690,939    —    248,717,997
Borrowings
   164,767    16,202,986    —    16,367,753
Debentures
   —    28,735,862    —    28,735,862
Derivative liabilities
   2,090,861    —    51,408    2,142,269
Other financial liabilities^(*)
   —    21,490,341    —    21,490,341








Total
   2,282,686    315,120,128    51,408    317,454,222








(*)
Other financial liabilities include 47,817 million Won of financial guarantee liabilities measured at amortized cost included in provisions.
   December 31, 2019
Financial assets
   Financial asset
at FVTPL    Financial assets
at FVTOCI    Financial assets
at amortized cost    Derivatives
assets
(Designated for
hedging)    Total
Deposits
   27,901    —    14,492,223    —    14,520,124
Securities
   4,906,867    27,730,531    20,320,539    —    52,957,937
Loans
   212,473    —    271,032,244    —    271,244,717
Derivative assets
   2,921,903    —    —    121,131    3,043,034
Other financial assets
   —    —    8,193,226    —    8,193,226










Total
   8,069,144    27,730,531    314,038,232    121,131    349,959,038










   December 31, 2019
Financial liabilities
   Financial liabilities at
FVTPL    Financial liabilities
at amortized cost    Derivatives
liabilities
(Designated for
hedging)    Total
Deposits due to customers
   27,530    264,685,578    —    264,713,108
Borrowings
   87,626    18,998,920    —    19,086,546
Debentures
   —    30,858,055    —    30,858,055
Derivative liabilities
   2,843,146    —    6,837    2,849,983
Other financial liabilities^(*)
   —    17,769,531    —    17,769,531








Total
   2,958,302    332,312,084    6,837    335,277,223








(*)
Other financial liabilities include 62,764 million Won of financial guarantee liabilities measured at amortized cost included in provisions.
(7) Income or expense from financial instruments by category
Income or expense from financial assets and liabilities by each category during the years ended December 31, 2017, 2018 and 2019 are as follows (Unit: Korean Won in millions):
   December 31, 2017
   Interest
Income (expense) Fees and
Commissions
Income (expense)    Provision (reversal)
of credit loss Others Total
Financial assets at FVTPL
   48,615 —    — 6,859 55,474
AFS financial assets
   239,030 80,041    (31,300 ) 362,712 650,483
HTM financial assets
   307,965 —    — — 307,965
Loans and receivables
   7,948,069 384,025    (862,273 ) 196,269 7,666,090
Financial liabilities at FVTPL
   — —    — (111,240 ) (111,240 )
Financial liabilities at amortized cost
   (3,323,029 ) —    — 39,373 (3,283,656 )
Net derivatives (designated for hedging)
   — —    — (109,447 ) (109,447 )
Off-balance provisions
   — —    77,140 — 77,140




Total
   5,220,650 464,066    (816,433 ) 384,526 5,252,809




   December 31, 2018
   Interest Income
(expense) Fees and
Commissions
Income (expense)    Provision (reversal)
of credit loss Others Total
Financial assets at FVTPL
   54,243 86,845    — 264,850 405,938
Financial assets at FVTOCI
   280,371 66    (2,027 ) 24,707 303,117
Securities at amortized cost
   376,788 —    (1,922 ) 431 375,297
Loans and other financial assets at amortized cost
   8,973,097 317,316    (415,084 ) 79,101 8,954,430
Financial liabilities at FVTPL
   (3,164 ) —    — 17,485 14,321
Financial liabilities at amortized cost
   (4,030,384 ) 27,742    — 25,498 (3,977,144 )
Net derivatives (designated for hedging)
   — —    — (672 ) (672 )
Off-balance provisions
   — —    89,459 — 89,459




Total
   5,650,951 431,969    (329,574 ) 411,400 6,164,746




   December 31, 2019
   Interest
Income (expense) Fees and
Commissions
Income (expense)    Provision (reversal)
of credit loss Others    Total
Financial assets at FVTPL
   50,277 89,817    — 112,434    252,528
Financial assets at FVTOCI
   474,751 —    (3,297 ) 31,995    503,449
Securities at amortized cost
   436,340 —    1,415 —    437,755
Loans and other financial assets at amortized cost
   9,615,060 296,435    (385,758 ) 102,115    9,627,852
Financial liabilities at FVTPL
   — —    — —    —
Financial liabilities at amortized cost
   (4,682,722 ) —    — —    (4,682,722 )
Net derivatives (designated for hedging)
   — —    — 36,982    36,982
Off-balance provisions
   — 71,106    13,396 —    84,502






Total
   5,893,706 457,358    (374,244 ) 283,526    6,260,346






12. DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS
(1) Derecognition of financial ~~assets~~instruments
Transferred financial assets that do not meet the condition of derecognition in their entirety.
1) The book value, fair value of, and maximum exposure to loss from the financial assets that were derecognized from the consolidated financial statements of the Group through disposals, but the Group still have continuous involvements are given as below:
1) Bonds sold under repurchase agreements
~~2016~~
~~As of December 31~~ ~~For the year ended December 31~~
~~Classification~~ ~~Carrying~~
~~amount of~~
~~Continuing~~
~~involvement~~ ~~Fair value~~
~~amount of~~
~~Continuing~~
~~involvement~~ ~~Maximum~~
~~exposure~~
~~to loss~~ ~~Gain(loss)~~
~~recognized~~
~~in the year~~ ~~Accumulated~~
~~Gain(loss)~~
~~recognized~~
~~Asset~~ ~~Liability~~ ~~Asset~~ ~~Liability~~
~~Conditional disposal of loans to KAMCO~~^(*)
~~Off-balance item~~ — — — — ~~701~~ — —
~~2017~~
~~As of December 31~~ ~~For the year ended December 31~~
~~Classification~~ ~~Carrying~~
~~amount of~~
~~Continuing~~
~~involvement~~ ~~Fair value~~
~~amount of~~
~~Continuing~~
~~involvement~~ ~~Maximum~~
~~exposure~~
~~to loss~~ ~~Gain(loss)~~
~~recognized~~
~~in the year~~ ~~Accumulated~~
~~Gain(loss)~~
~~recognized~~
~~Asset~~ ~~Liability~~ ~~Asset~~ ~~Liability~~
~~Conditional disposal of loans to KAMCO~~^(*)
~~Off-balance item~~ — — — — — — —
~~(*)~~ KAMCO is still in the process of collecting cash flows related to the transferred assets and the maximum exposure to loss represents the carrying amounts of the assets at the date when they were transferred to KAMCO. Under previous Korea Generally Accepted Accounting Principles (K-GAAP), the Group derecognized the transferred assets although the Group retains and continues to retain substantially all such risks and rewards and according to the transition exemptions in IFRS 1~~“First-time adoption of International Financial Reporting Standard”~~, the Group did not reassess the derecognition criteria for these transfers. As the process of collecting cash flows is completed, there is no financial instruments that qualify for derecognition but the Group still has continuous involvement as of December 31, 2017.
2) ~~Transferred financial assets that are not derecognized in their entirety~~
a) ~~Disposal of securities under repurchase agreement~~
The financial instruments that were disposed but the Group agreed to repurchase at the fixed amounts at the same time, so that they did not meet the conditions of derecognition, are as ~~follows:~~follows (Unit: Korean Won in millions):

      December 31,
2016    December 31,
2017    December 31,
2018    December 31,
2019
Assets transferred
   AFS financial assets    2,546,683    9,998    Financial assets at FVTPL    —    407,985
   HTM financial assets    7,133    5,436
Assets transferred
Financial assets at FVTOCI    33,588    56,975
Securities at amortized cost    5,552    42,841
Loans and other financial assets at amortized cost    —    82,594









Total
   2,553,816    15,434    Total    39,140    590,395








Related liabilities

Bonds sold under repurchase agreements
   2,004,905    3,173    Bonds sold under repurchase agreements    42,907    569,002








2) Securities loaned
b) ~~Loaned securities~~
When the Group loans its securities to outside parties, the legal ownerships of the securities are ~~transferred,~~transferred; however, they should be returned at the end of lending ~~period therefore~~period. Therefore, the Group does not derecognize them from the consolidated financial statements as it owns majority of risks and benefits from the securities continuously, regardless of the transfer of legal ownership. The carrying amounts of the securities loaned are as follows (Unit: Korean Won in millions):
   December 31,
2018    December 31,
2019
Loaned to
Financial assets at FVTOCI
Korean financial institution’s debt securities and others    40,029    80,737    Korea Securities Finance Corporation

      December 31,
2016    December 31,
2017
Loaned to
Financial assets at FVTPL

Equity securities- listed stock
   4,459    —
Samsung Securities Co., Ltd. and others
AFS financial assets

Korean treasury and government agencies bonds
   493,579    170,256
Korea Securities Depository and others






Total
   498,038    170,256





The details of the transferred financial assets that ~~are~~do not ~~derecognized~~meet the conditions of derecognition in their entirety, such as disposal of securities under repurchase agreement or securities loaned, ~~securities,~~ are explained in Note 18. The Group does not have continuing involvement in transferred financial assets.
~~(2)~~ ~~The offset with~~(2) The offset of financial assets and liabilities
The Group has both receivables and payables related to the Korean exchange markets that meet the offsetting criteria under IAS 32 and therefore the net amount of uncollected Korean exchange receivables (or unpaid Korean exchange payables) is included in loan and receivables (or other financial liabilities) on the consolidated statement of financial position.
The Group possesses both the uncollected domestic exchange receivables and the unpaid domestic exchange payable, which satisfy offsetting criteria of IAS 32. Therefore, the total number of uncollected domestic exchange receivables or unpaid domestic exchange payable has ~~the right to~~been offset ~~certain derivatives~~with part of unpaid domestic exchange payable or uncollected domestic exchange receivables and has been disclosed in loans at amortized cost and other financial assets and other financial liabilities ~~(including corresponding cash collateral placed or received) as well as certain spot foreign exchange receivables in case of default, insolvency or bankruptcy by one~~ of the ~~counterparties. These agreements do not qualify for offsetting on the~~ Group’s ~~balance sheet under IAS 32.~~statements of financial position respectively.
The Group ~~has entered into a sale under repurchase agreements~~possesses the derivative assets, derivative liabilities, receivable spot exchange and accounted it as collateralized borrowing. Also, the Group has entered into a purchase under resale agreement and accounted it as secured loans. The repurchase and resale agreement can have the offsetting right only under the trading party’s default, insolvency, or bankruptcy whichpayable spot exchange that do not satisfy the offsetting criteria of IAS 32, but provide the Group ~~recorded~~under the circumstances of the trading party’s defaults, insolvency or bankruptcy, with the right of offsetting. Items such as cash collateral cannot satisfy the offsetting criteria of IAS 32, but in accordance with the collateral arrangements and under the circumstances of the trading party’s default, insolvency or bankruptcy, the net amount of derivative assets and derivative liabilities, receivable spot exchange and payable spot exchange can be offset.
The Group has entered into a resale and repurchase agreement and accounted it as a collateralized ~~borrowings in borrowings~~borrowing. The Group has also entered into a resale and ~~the~~purchase agreement and accounted it as a secured ~~loans in loans and receivables.~~loans. The Group under the repurchase agreements has an offsetting right only upon the ~~counter-party’s~~counterparty’s default, insolvency or ~~bankruptcy,~~bankruptcy; thus, the repurchase agreements are applied by the TBMA/ISMA Global Master Repurchase Agreement, of which dodoes not satisfy the offsetting criteria of IAS 32. The Group disclosed bonds sold ~~(purchased)~~ under repurchase agreements as borrowings ~~(loans~~ and ~~receivables).~~bonds purchased under resale agreements as loan at amortized cost and other financial assets.
As ~~at the end~~ of ~~reporting periods,~~December 31, 2018 and 2019, the financial instruments to be off set ~~off~~ and may be covered by master netting agreements and similar agreements are ~~given~~ as ~~below:~~follows (Unit: Korean Won in millions):

   December 31, 2016
   Gross
amounts of
recognized
financial
assets    Gross
amounts of
recognized
financial
liabilities set off    Net amounts
of financial
assets
presented    Related amounts not set off in
the statement of financial
position    Net amounts
            Offsetting
    agreement        Cash
collateral
    received
Financial assets:

Derivative assets and others^(*1)
   2,962,969    8,442    2,954,527    6,546,232    69,834    1,016,550
Receivable spot exchange^(*2)
   4,678,089    —    4,678,089
Bonds purchased under resale agreements^(*2)
   8,854,753    —    8,854,753    8,854,753    —    —
Domestic exchanges receivable^(*2)(*5)
   31,456,123    30,883,281    572,842    —    —    572,842












Total
   47,951,934    30,891,723    17,060,211    15,400,985    69,834    1,589,392












   December 31, 2016
   Gross
amounts of
recognized
financial
liabilities    Gross
amounts of
recognized
financial
assets set off    Net amounts
of financial
liabilities
presented    Related amounts not set off in
the statement of financial
position    Net amounts
            Offsetting
    agreement        Cash
collateral
    pledged
Financial liabilities:

Derivative liabilities and others^(*1)
   3,467,374    8,442    3,458,932    6,695,062    105,270    1,341,375
Payable spot exchange^(*3)
   4,682,775    —    4,682,775
Bonds sold under repurchase agreements^(*4)
   2,004,905    —    2,004,905    2,004,905    —    —
Domestic exchanges payable^(*3)(*5)
   39,345,524    30,883,281    8,462,243    6,161,151    —    2,301,092












Total
   49,500,578    30,891,723    18,608,855    14,861,118    105,270    3,642,467












December 31, 2018
Gross
amounts of
recognized
financial
assets Gross
amounts of
recognized
financial
assets setoff Net
amounts of
financial
assets
presented Related amounts not setoff
in the consolidated
statement of financial
position Net
amounts
Netting
agreements
and others Cash
collateral
    received
Financial assets:

Derivative assets^(*1)
1,908,542 — 1,908,542 5,527,117 66,857 515,100
Receivable spot exchange^(*2)
4,200,532 — 4,200,532
Bonds purchased under resale agreements^(*2)
11,701,951 — 11,701,951 11,701,951 — —
Domestic exchange settlement credits^(*2)(*6)
30,090,598 29,699,412 391,186 — — 391,186

Total
47,901,623 29,699,412 18,202,211 17,229,068 66,857 906,286

   December 31, 2017
   Gross
amounts of
recognized
financial
assets    Gross
amounts of
recognized
financial
assets set off    Net amounts
of financial
assets
presented    Related amounts not set off
in the consolidated statement
of financial position    Net amounts
            Netting
agreements
and others    Cash
collateral
    received
Financial assets:

Derivative assets and others^(*1)
   2,992,476    1,710    2,990,766    5,787,448    174,415    796,629
Receivable spot exchange^(*2)
   3,767,726    —    3,767,726
Bonds purchased under resale agreements^(*2)
   16,859,064    —    16,859,064    16,859,064    —    —
Domestic exchanges receivable^(*2)(*5)
   39,050,227    38,985,354    64,873    —    —    64,873












Total
   62,669,493    38,987,064    23,682,429    22,646,512    174,415    861,502












   December 31, 2017
   Gross
amounts of
recognized
financial
liabilities    Gross
amounts of
recognized
financial
liabilities set off    Net amounts
of financial
liabilities
presented    Related amounts not set off in
the consolidated statement
of financial position    Net amounts
            Netting
agreements
and others    Cash
collateral
pledged
Financial liabilities:

Derivative liabilities and others^(*1)
   3,160,217    1,710    3,158,507    5,866,682    157,750    857,961
Payable spot exchange^(*3)
   3,723,886    —    3,723,886
Bonds sold under repurchase agreements^(*4)
   3,173    —    3,173    3,173    —    —
Domestic exchanges payable^(*3)^(*5)
   40,284,515    38,985,354    1,299,161    1,293,931    —    5,230












Total
   47,171,791    38,987,064    8,184,727    7,163,786    157,750    863,191












December 31, 2018
Gross
amounts of
recognized
financial
liabilities Gross
amounts of
recognized
financial
liabilities
setoff Net amounts
of financial
liabilities
presented Related amounts not setoff
in the consolidated statement
of financial position Net amounts
Netting
agreements
and others Cash
collateral
    pledged
Financial liabilities:

Derivative liabilities^(*1)
1,862,681 — 1,862,681 5,540,147 115,615 577,713
Equity-linked securities index in short position^(*3)
164,767 — 164,767
Payable spot exchange^(*4)
4,206,027 — 4,206,027
Bonds sold under repurchase agreements^(*5)
42,907 — 42,907 42,907 — —
Domestic exchange settlement debits^(*4)(*6)
36,832,774 29,699,412 7,133,362 6,231,538 — 901,824

Total
43,109,156 29,699,412 13,409,744 11,814,592 115,615 1,479,537

(*1) ~~Others~~
The items include derivatives held for trading, derivatives designated for ~~hedging~~hedging.
(*2)
The items are included in loan at amortized cost and other financial assets.
(*3)
The items are equity linked securities related to ~~derivatives.~~derivatives and are included in financial liabilities at FVTPL.
(*2)4) ~~Items are included in loans and receivables.~~
~~(*3)~~ ~~Items~~
The items are included in other financial liabilities.
~~(*4)~~ ~~Items are included in borrowings.~~
(*5)
The items are included in borrowings.
(*6)
Certain financial assets and liabilities are presented as ~~offset.~~net amounts.
   December 31, 2019
   Gross
amounts of
recognized
financial
assets    Gross
amounts of
recognized
financial
assets setoff    Net
amounts of
financial
assets
presented    Related amounts not
setoff in the consolidated
statement of financial
position    Net
amounts
   Netting
agreements
and others    Cash
collateral
received
Financial assets:

Derivative assets^(*1)
   3,032,894    —    3,032,894    7,058,885    111,122    975,093
Receivable spot exchange^(*2)
   5,112,206    —    5,112,206
Bonds purchased under resale agreements^(*2)
   8,981,752    —    8,981,752    8,981,752    —    —
Domestic exchange settlement credits^(*2)(*6)
   31,642,486    31,269,258    373,228    —    —    373,228












Total
   48,769,338    31,269,258    17,500,080    16,040,637    111,122    1,348,321












   December 31, 2019
   Gross
amounts of
recognized
financial
liabilities    Gross
amounts of
recognized
financial
liabilities
setoff    Net
amounts of
financial
liabilities
presented    Related amounts not
setoff in the
consolidated statement
of financial position    Net
amounts
   Netting
agreements
and others    Cash
collateral
pledged
Financial liabilities:

Derivative liabilities^(*1)
   2,824,449    —    2,824,449    7,071,549    172,488    779,424
Equity-linked securities in short position^(*3)
   87,626    —    87,626
Payable spot exchange(*4)
   5,111,386    —    5,111,386
Bonds sold under repurchase agreements^(*5)
   569,002    —    569,002    180,402    388,600    —
Domestic exchange settlement debits^(*4)(*6)
   32,531,186    31,269,258    1,261,928    1,257,280    —    4,648












Total
   41,123,649    31,269,258    9,854,391    8,509,231    561,088    784,072












(*1)
The items include derivatives held for trading, derivatives designated for hedging.
(*2)
The items are included in loan at amortized cost and other financial assets.
(*3)
The items are equity linked securities related to derivatives and are included in financial liabilities at FVTPL.
(*4)
The items are included in other financial liabilities.
(*5)
The items are included in borrowings.
(*6)
Certain financial assets and liabilities are presented as net amounts.
13.
~~13.~~ INVESTMENTS IN JOINT VENTURES AND ASSOCIATES

(1)
Investments in joint ventures and associates accounted for using the equity method of accounting are as ~~follows (Unit: Korean Won in millions):~~follows:

      Percentage of ownership (%)
Financial statement
used as of
Investors and investees

Main business
   December 31,
2016    December 31,
2017
Woori Bank and Woori Private Equity
Asset Management Co., Ltd.:

Woori Blackstone Korea Opportunity No.1 Private Equity Fund^(*19)
   Other finance business    26.4    —    —
Woori Bank:

Kumho Tire Co., Inc.^(*1)(*2)
   Manufacturing    14.2    14.2    September 30^(*3)
Woori Service Networks Co., Ltd.^(*4)
   Freight & staffing services    4.9    4.9    November 30^(*3)
Korea Credit Bureau Co., Ltd.^(*5)
   Credit information    9.9    9.9    December 31
Korea Finance Security Co., Ltd.^(*4)
   Security service    15.0    15.0    November 30^(*3)
Chin Hung International Inc.^(*2)(*9)
   Construction    28.4    25.3    November 30^(*3)
Poonglim Industrial
Co., Ltd.^{(*6)(*12)(*14)}
   Construction    31.0    29.4    September 30^(*3)
STX Engine Co., Ltd.^{(*1)(*2)(*20)}
   Manufacturing    29.2    29.2    —
Samho International Co., Ltd.^(*2)(*18)
   Construction    7.8    —    —
Force TEC Co., Ltd.^(*6)(*15)
   Freight & staffing services    34.4    —    —
STX Corporation^{(*1)(*2)(*6)(*13)}
   Wholesale ofnon-specialized goods    9.5    19.7    September 30^(*3)
Saman Corporation^(*5)
   General construction Technology service    9.2    9.2    September 30^(*3)
Dongwoo C & C Co., Ltd.^(*6)
   Construction    23.2    23.2    —
SJCO Co., Ltd.^(*6)
   Aggregate transportation and wholesale    26.5    26.5    —
G2 Collection Co., Ltd.^(*6)
   Wholesale and retail sales    28.9    28.9    —
The Base Enterprise Co., Ltd.^(*6)
   Manufacturing    48.4    48.4    —
Heungjiwon Co., Ltd.^(*6)(*17)
   Other printing    27.8    —    —
Kyesan Engineering Co., Ltd.^(*6)
   Construction    23.2    23.2    —
Good Software Lap Co., Ltd.^(*6)
   Service    28.9    28.9    —
Wongwang Co., Ltd.^(*6)
   Wholesale and real estate    29.0    29.0    —
Sejin Construction Co., Ltd.^(*6)
   Construction    29.6    29.6    —
Deokwon Food Co., Ltd.^(*6)(*17)
   Poultry processing and storage    27.3    —    —
QTS Shipping Co., Ltd.^(*6)
   Complex transportation brokerage    49.4    49.4    —
DAEA SNC Co., Ltd.^(*6)
   Wholesale and retail sales    24.0    24.0    —
ARES-TECH Co., Ltd.^(*6)
   Electronic component manufacturing    23.4    23.4    —
Reading Doctors Co., Ltd.^(*6)(*10)
   Other service business    —    35.4    —
PREXCO Co., Ltd.^(*6)(*10)
   Manufacturing    —    28.1    —
Hyunwoo International
Co., Ltd.^(*6)(*10)
   Manufacturing    —    25.9    —
Jiwon Plating Co., Ltd.^(*6)(*16)
   Plating    —    20.5    —
Cultizm Korea LTD Co., Ltd.^(*6)(*16)
   Wholesale and retail sales    —    31.3    —
Percentage of ownership
(%)
Location

Financial
statements as of
Joint ventures and associates

Main business
December 31,
2018 December 31,
2019
Woori Bank:

Woori Service Networks Co., Ltd.^(*1)
Freight & staffing services 4.9 4.9 Korea November 30, 2019^(*5)
Korea Credit Bureau Co., Ltd.^(*2)
Credit information 9.9 9.9 Korea December 31, 2019
Korea Finance Security Co., Ltd.^(*1)
Security service 15.0 15.0 Korea November 30, 2019^(*5)
Saman Corporation^(*2)
General construction Technology service 9.2 9.2 Korea September 30, 2019^(*5)
Wongwang Co., Ltd.^(*4)
Wholesale and real estate 29.0 29.0 Korea —
Sejin Construction Co., Ltd.^(*4)
Construction 29.6 29.6 Korea —
ARES-TECH Co., Ltd.^(*4)
Electronic component manufacturing 23.4 23.4 Korea —
Reading Doctors Co., Ltd.^(*4)
Other services 35.4 35.4 Korea —
Cultizm Korea LTD Co., Ltd.^(*4)
Wholesale and retail sales 31.3 31.3 Korea —
NK Eng Co., Ltd.^(*4)
Manufacturing 23.1 23.1 Korea —
Woori Growth Partnerships New Technology Private Equity Fund
Other financial services 23.1 23.1 Korea December 31, 2019
2016KIF-IMM Woori Bank Technology Venture Fund
Other financial services 20.0 20.0 Korea December 31, 2019
K BANK Co., Ltd.^(*2)
Finance 14.1 14.5 Korea November 30, 2019^(*5)
Smart Private Equity Fund No.2
Other financial services 20.0 20.0 Korea December 31, 2019
Woori Bank-Company K Korea Movie Asset Fund
Other financial services 25.0 25.0 Korea December 31, 2019
Well to Sea No. 3 Private Equity Fund^(*7)
Finance 50.0 50.0 Korea September 30, 2019^(*5)
Partner One Value Up I Private Equity Fund
Other financial services 23.3 23.3 Korea December 31, 2019
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership
Other financial services 20.0 20.0 Korea December 31, 2019
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund
Other financial services 25.0 25.0 Korea December 31, 2019
LOTTE CARD Co., Ltd.^(*8)
Credit card and installment financing — 20.0 Korea September 30, 2019^(*5)
Japanese Hotel Real Estate Private Equity Fund 2^(*8)
Other financial services — 19.9 Korea October 31, 2019^(*5)
Woori Investment Bank Co., Ltd.:

Nomura-Rifa Private Real Estate Investment Trust No.17^(*6)
Other financial services 19.4 — Korea —
Woori Private Equity Asset Management Co., Ltd.:

Uri Hanhwa Eureka Private Equity Fund
Other financial services 0.8 0.8 Korea December 31, 2019
Japanese Hotel Real Estate Private Equity Fund 1:

Godo Kaisha Oceanos 1^(*8)
Other financial services — 47.8 Japan October 31, 2019^(*5)
Woori bank and Woori card Co., Ltd.:

Dongwoo C & C Co., Ltd.^(*4)
Construction 24.5 24.5 Korea —

      Percentage of ownership (%)
Financial statement
used as of
Investors and investees

Main business
   December 31,
2016    December 31,
2017
Gil Co.,Ltd.^(*6)(*16)
   Manufacturing    —    26.1    —
NK Eng Co., Ltd.^(*6)(*10)
   Manufacturing    —    23.1    —
Woori Growth Partnerships New Technology Private Equity Fund
   Other financial business    23.1    23.1    December 31
2016KIF-IMM Woori Bank Technology Venture Fund
   Other financial business    20.0    20.0    December 31
K BANK Co., Ltd.^(*5)
   Finance    13.0    13.8    November 30^(*3)
Smart Private Equity Fund No.2^(*11)
   Other financial business    —    20.0    December 31
Woori Bank-Company K Korea Movie Asset Fund^(*11)
   Other financial business    —    25.0    December 31
Well to Sea No. 3 Private Equity Fund^(*11)
   Finance    —    50.0    September 30^(*3)
Woori Private Equity Fund:

Woori Renaissance Holdings^(*7)
   Other financial business    51.6    —    —
Woori Private Equity Asset Management Co., Ltd.,:

Woori Columbus 1st Private Equity Fund^(*8)
   Other financial business    2.0    —    —
Woori Investment Bank Co., Ltd.

Nomura-Rifa Private Real Estate Investment Trust No.17^(*11)
   Other financial business    —    25.0    December 31
Percentage of ownership
(%)
Location

Financial
statements as of
Joint ventures and associates

Main business
December 31,
2018 December 31,
2019
SJCO Co., Ltd.^(*4)
Aggregate transportation and wholesale 26.5 28.7 Korea —
G2 Collection Co., Ltd.^(*4)
Wholesale and retail sales 28.9 29.2 Korea —
The Base Enterprise Co., Ltd.^(*4)
Manufacturing 48.4 48.4 Korea —
Kyesan Engineering Co., Ltd.^(*4)
Construction 23.3 23.3 Korea —
Good Software Lap Co., Ltd.^(*4)
Service 29.4 29.4 Korea —
QTS Shipping Co., Ltd.^(*4)
Complex transportation brokerage 49.4 49.8 Korea —
DAEA SNC Co., Ltd.^(*4)
Wholesale and retail sales 24.0 25.5 Korea —
Force TEC Co., Ltd.^(*4)
Manufacturing 25.8 25.8 Korea —
Sinseong Trading Co., Ltd.^(*4)
Manufacturing 27.2 27.9 Korea —
PREXCO Co., Ltd.^(*4)
Manufacturing 28.1 28.1 Korea —
Jiwon Plating Co., Ltd.^(*4)
Plating 20.8 20.8 Korea —
Gil Co.,Ltd.^(*6)
Manufacturing 26.1 — Korea —
Youngdong Sea Food Co., Ltd.^(*4)
Processed sea food manufacturing 24.0 24.5 Korea —
Woori Bank , Woori Investment Bank Co., Ltd. and Woori Private Equity Asset Management Co., Ltd.:

Woori-ShinyoungGrowth-Cap Private Equity Fund I^(*8)
Other financial services — 31.9 Korea December 31, 2019
Woori Bank and Woori Investment Bank Co., Ltd.:

Chin Hung International Inc.^(*3)
Construction 25.3 25.3 Korea November 30, 2019^(*5)
PCC-Woori LP Secondary Fund^(*8)
Other financial services — 38.8 Korea December 31, 2019
Woori Bank and Woori Private Equity Asset Management Co., Ltd.:

Woori-Q Corporate Restructuring Private Equity Fund^(*8)
Trust and collective investment — 38.4 Korea December 31, 2019

(*1) ~~The Group has significant influence on these entities through its position in the creditors’ council which is the decision making body regarding to financial and operational policies of associates.~~
~~(*2)~~ The investments in associates that have quoted market prices are Kumho Tire Co., Ltd. (current period: 4,425 Korean Won, previous year: 8,480 Korean Won), Chin Hung International Inc. (current period: 1,915 Korean Won, previous year: 2,090 Korean Won), STX Engine Co., Ltd. (current period: 9,150 Korean Won, previous year: 6,630 Korean Won), Samho International Co., Ltd. (previous year: 16,900 Korean Won), STX Corporation. (previous year: 1,660 Korean Won).
~~(*3)~~ ~~The significant transactions and events between the end of reporting period of the associates and the Group have been properly incorporated.~~
~~(*4)~~
Most of the significant business transactions of associates are with the Group as of December 31, ~~2016~~2018 and ~~2017.~~2019.
(*5)2)
The Group can participate in decision-making body and exercise significant influence over financial policies and operational policies decision making of the associates.
(*3)
Equity securities that have published market price among investment assets of associates ~~through business partnerships.~~are common shares of Chin Hung International Inc. Quoted market prices of Chin Hung International Inc. are 2,065 Won and 2,310 Won as of December 31, 2018 and 2019, respectively.
(*4)
There is no investment balance as of December 31, 2018 and 2019.
(*5)
The equity method was applied using the most recent financial statements available from the settlement date because no financial statements were available at the end of December and the significant transactions or events that occurred between the end of the reporting period of the associate and the end of the reporting period of the subsidiary were duly reflected.
(*6)
The ~~carrying values of investments in Force TEC Co., Ltd., STX Corporation and Deokwon Food Co., Ltd. are nil~~entity was excluded from the associate as ofthe Group sold its entire stake during the year ended December 31, 2016 and those of investments in Reading Doctors Co., Ltd., PREXCO Co., Ltd., Hyunwoo International Co., Ltd., Jiwon Plating Co., Ltd., Cultizm Korea LTD Co., Ltd., Gil Co., Ltd. and NK Eng Co., Ltd. are nil as of December 31, 2017. Furthermore, those of investments in Poonglim Industrial Co., Ltd., Dongwoo C&C Co., Ltd., SJCO Co., Ltd., G2 collection Co., Ltd., The Base Enterprise Co., Ltd., Heungjiwon Co., Ltd., Kyesan Engineering Co., Ltd., Good Software Lab Co., Ltd., Wongwang Co., Ltd., Sejin Construction Co., Ltd., QTS Shipping Co., Ltd., DAEA SNC Co., Ltd. and ARES-TECH Co., Ltd. are nil as of both December 31, 2016 and 2017.2019.
(*7)
The Group ~~owns over 50% ownership as of December 31, 2016. However,~~has signed a contract that the ~~investment in this entity was accounted for using equity method as~~Group (or the ~~ownership and related contracts meet~~third party designated by the ~~definition of joint arrangement under IFRS 11 Joint Arrangements. As of December 31, 2017~~Group) has the ~~entity has been excluded from~~priority to purchase the ~~range of associates as liquidated.~~underlying assets (Aju Capital Co. Ltd.) when it is disposed by Well to Sea No. 3 Private Equity Fund.
(*8)
~~As a general partner of Woori Columbus 1st Private Equity Fund,~~Due to capital contribution by the Group ~~had significant influence over~~for the ~~entity’s operational and financial policy making process, including participating in making decision of~~
dividend or other distribution. As such, the investment in this entity was accounted for using equity method as of December 31, 2016. The Woori Columbus 1st Private Equity Fund has been removed from the list of associated companies as it was liquidated during the current period.
~~(*9)~~ ~~Due to consolidation of stocks and debt-equity swap, the Group’s number of holding shares and ownership ratio have decreased.~~
~~(*10)~~ Even though the Group’s ownership ratio of the entity was more than 20% as of December 31, 2016, the Group did not have significant influence over the entity due to the fact that the entity was going through workout process under receivership, and thus the entity was excluded from the investment in associates. However, as the workout process was completed during the yearsyear ended December 31, ~~2017, it has~~2019, the entities have been included in the investment in associates.
~~(*11)~~ ~~Due to capital contribution by the Group during the years ended December 31, 2017, the entities were included in the investment in associates.~~
~~(*12)~~ ~~The Group has sold a part of shares of the associates so the number of shares holding has decreased during the years ended December 31, 2017.~~
~~(*13)~~ ~~Due to debt-equity swap capital stock, the Group ownership ratio has increased during the years ended December 31, 2017.~~
~~(*14)~~ As the carrying amounts of certain investments in associates had been reduced to zero, the Group discontinued the use of the equity method in accounting for those investments, and unrecognized losses due to the restricted application of equity method amount to 612 million Won and 16,344 million Won as of December 31, 2016 and 2017, respectively.
~~(*15)~~ Not in scope for the associates, because the Group does not have significant influence over the entity due to the fact that it is going through workout process under receivership as of December 31, 2017.
~~(*16)~~ ~~Due to debt-equity swap, the entity was included in the investment in associates during the years ended December 31, 2017.~~
~~(*17)~~ ~~As the Group sold its entire ownership interest of the entities, it was exclude from the investment in associates during the years ended December 31, 2017.~~
~~(*18)~~ ~~The entity was sold after it was transferred to assets held for sale and was excluded from the investment in associates.~~
~~(*19)~~ ~~It has been removed from the list of associated companies as it was liquidated during the current period.~~
~~(*20)~~ The shares of STX Engine Co., Ltd. owned by the Group were reclassified as assets held for sale, as the creditor financial institutions committee entered into a contract with UAMCO.,Ltd during the current period to sell STX Engine Co., Ltd. shares.
(2)
Changes in the carrying value of investments in joint ventures and associates accounted for using the equity method of accounting are as follows (Unit: Korean Won in millions):

For the year ended December 31, 2015
Acquisition
cost January 1,
2015 Share
of
profits
(losses) Acquisi-
tion^(*3) Disposal
and
others Dividends Change in
Capital Impairment Other
changes December 31,
2015
Woori Blackstone Korea Opportunity Private Equity Fund No.1
81,608 100,436 9,266 — (37,367 ) (16,291 ) — — — 56,044
Kumho Tire Co., Inc.
175,652 224,829 (11,979 ) — — — 1,201 — — 214,051
Woori Service Networks Co., Ltd.
108 130 21 — — (12 ) — — — 139
Korea Credit Bureau Co., Ltd.
2,215 3,378 335 1,098 — — 480 — — 5,291
Korea Finance Security Co., Ltd.
3,337 4,272 (425 ) — (81 ) (55 ) — — — 3,711
United PF 1st Corporate financial stability
191,617 203,418 3,350 — (19,176 ) — — — — 187,592
Chin Hung International Inc.
60,275 28,491 (14,489 ) 29,451 — — 482 — — 43,935
Poonglim Industrial Co., Ltd.
13,917 — 10,643 — — — (1 ) (22,472 ) 17,143 5,313
STX Engine Co., Ltd.
47,008 2,293 (3,901 ) 45,030 — — 1,823 — 6,031 51,276
Samho Co., Ltd.
7,492 11,257 3,012 — — — 56 — — 14,325
STX Corporation
42,215 14,347 (10,673 ) — — — 559 — 18 4,251
Osung LST Co., Ltd.
15,405 18,482 (4,322 ) — — — 4 (33,839 ) 30,660 10,985
Saman Corporation
8,521 — — 8,521 — — — — — 8,521
Phoenix Digital Tech Co., Ltd.
1,334 — 1,610 — (1,610 ) — — — — —
Woori Renaissance Holdings
63,000 36,019 3,518 — — (2,416 ) — — — 37,121
Woori Columbus First PEF
1,200 1,084 222 — — — — — — 1,306

Total
714,904 648,436 (13,812 ) 84,100 (58,234 ) (18,774 ) 4,604 (56,311 ) 53,852 643,861

For the year ended December 31, 2016
Acquisition
cost January 1,
2016 Share
of
profits
(losses) Acquisi-
tion^(*1) Disposal
and
others^(*2) Dividends Change in
Capital Impairment December 31,
2016
Woori Blackstone Korea Opportunity Private Equity Fund No.1
43,917 56,044 10,093 — (37,036 ) (13,812 ) — — 15,289
Kumho Tire Co., Inc.
175,652 214,050 (13,172 ) — — — (546 ) — 200,332
Woori Service Networks Co., Ltd.
108 139 18 — — (12 ) — — 145
Korea Credit Bureau Co., Ltd.
3,313 5,291 436 — — (135 ) — — 5,592
Korea Finance Security Co., Ltd.
3,266 3,711 (281 ) — — (54 ) — — 3,376
United PF 1st Corporate financial stability
172,441 187,592 3,265 — (190,857 ) — — — —
Chin Hung International Inc.
89,725 43,936 (996 ) — — — 92 — 43,032
Poonglim Industrial Co., Ltd.
13,916 5,313 (2,378 ) — — — (2,935 ) — —
STX Engine Co., Ltd.
92,038 51,276 (6,665 ) — — — (1,575 ) — 43,036
Samho Co., Ltd.
7,492 14,325 5,392 — — — 12 — 19,729
STX Corporation
42,215 4,251 (4,222 ) — — — (29 ) — —
Osung LST Co., Ltd.
15,405 10,985 (2,903 ) — (6,909 ) — — (1,173 ) —
Saman Corporation
8,521 8,521 252 — — — (74 ) — 8,699
K-Growth crowd 2step Fund
800 — (13 ) 800 (787 ) — — — —
Woori Growth Partnerships New Technology Private Equity Fund
13,602 — (640 ) 13,602 — — 156 — 13,118
2016KIF-IMM Woori Bank Technology Venture Fund
1,800 — — 1,800 — — — — 1,800
K BANK Co.,Ltd.
32,500 — (1,589 ) 32,500 — — (469 ) — 30,442
Woori Renaissance Holdings
63,000 37,121 17,303 — — (2 ) — — 54,422
Woori Columbus First PEF
1,200 1,306 (43 ) — (1,065 ) (198 ) — — —

Total
780,911 643,861 3,857 48,702 (236,654 ) (14,213 ) (5,368 ) (1,173 ) 439,012

For the year ended December 31, 2017

For the year ended December 31, 2017
Acquisition
cost January 1,
2017 Share
of
profits
(losses) Acquisi-
tion^(*4) Disposal
and
others^(*5) Dividends Change
in
capital Impairment Others^(*4) December 31,
2017 Acquisition
cost January 1,
2017 Share of
profits
(losses) Acquisition^(*) Disposal and
others Dividends Change in
capital Impairment Others^(*) December 31,
2017
Woori Blackstone Korea Opportunity No.1 Private Equity Fund
— 15,289 (4,617 ) — (7,369 ) (3,303 ) — — — — — 15,289 (4,617 ) — (7,369 ) (3,303 ) — — — —
Kumho Tire Co., Inc.
175,652 200,332 (102 ) — — — 1,545 (102,842 ) — 98,933 175,652 200,332 (102 ) — — — 1,545 (102,842 ) — 98,933
Woori Service Networks Co., Ltd.
108 145 21 — — (8 ) — — — 158 108 145 21 — — (8 ) — — — 158
Korea Credit Bureau Co., Ltd.
3,313 5,592 371 — — (147 ) — — — 5,816 3,313 5,592 371 — — (147 ) — — — 5,816
Korea Finance Security Co., Ltd.
3,266 3,376 197 — — (54 ) — — — 3,519 3,266 3,376 197 — — (54 ) — — — 3,519
Chin Hung International Inc.
89,725 43,032 (14,375 ) 41,053 — — 1,535 — (26,144 ) 45,101 89,725 43,032 (14,375 ) 41,053 — — 1,535 — (26,144 ) 45,101
Poonglim Industrial Co., Ltd.
13,916 — (6,733 ) — — — — — 6,733 — 13,916 — (6,733 ) — — — — — 6,733 —
STX Engine Co., Ltd.
92,038 43,036 (1,010 ) — (46,217 ) — 4,191 — — — 92,038 43,036 (1,010 ) — (46,217 ) — 4,191 — — —
Samho Co., Ltd.
7,492 19,729 2,021 — (16,354 ) — (73 ) (5,323 ) — — 7,492 19,729 2,021 — (16,354 ) — (73 ) (5,323 ) — —
STX Corporation
42,215 — (29,788 ) 8,546 — — 417 — 27,772 6,947 42,215 — (29,788 ) 8,546 — — 417 — 27,772 6,947
Saman Corporation
8,521 8,699 (733 ) — — — 26 (6,738 ) — 1,254 8,521 8,699 (733 ) — — — 26 (6,738 ) — 1,254
Woori Growth Partnerships New Technology Private Equity Fund
13,602 13,118 (582 ) 15,729 (498 ) — (156 ) — — 27,611 13,602 13,118 (582 ) 15,729 (498 ) — (156 ) — — 27,611
2016KIF-IMM Woori Bank Technology Venture Fund
1,800 1,800 — 5,040 — — — — — 6,840 1,800 1,800 — 5,040 — — — — — 6,840
K BANK Co., Ltd.
32,500 30,442 (11,381 ) 12,892 — — (245 ) — 27 31,735 32,500 30,442 (11,381 ) 12,892 — — (245 ) — 27 31,735
Smart Private Equity Fund No.2
3,000 — (68 ) 3,000 — — — — — 2,932 3,000 — (68 ) 3,000 — — — — — 2,932
Woori Bank-Company K Korea Movie Asset Fund
1,500 — (43 ) 3,000 — — — — — 2,957 1,500 — (43 ) 3,000 — — — — — 2,957
Well to Sea No.3 Private Equity Fund
102,500 — 80,894 102,500 (508 ) — (577 ) — — 182,309 102,500 — 80,894 102,500 (508 ) — (577 ) — — 182,309
Woori Renaissance Holdings
— 54,422 (622 ) — — (57,109 ) — — 3,309 — — 54,422 (622 ) — — (57,109 ) — — 3,309 —
Nomura-Rifa Private Real Estate Investment Trust No.17
1,000 — (61 ) 1,000 — — — — — 939 1,000 — (61 ) 1,000 — — — — — 939

592,148 439,012 13,389 192,760 (70,946 ) (60,621 ) 6,663 (114,903 ) 11,697 417,051 592,148 439,012 13,389 192,760 (70,946 ) (60,621 ) 6,663 (114,903 ) 11,697 417,051

(*1)) ~~AFS financial assets decreased by 5,421 million Won due to transfers to investments in associates during the year ended December 31, 2016.~~
~~(*2)~~ The transfers from investments in associates to AFS financial assets amounted to 155,220 million Won and the transfers from investments in associates to assets held for sale amounted to 6,909 million Won during the year ended December 31, 2016.
~~(*3)~~ ~~Investments in associates increased by 83,002 million Won due to transfers between accounts, such as loan-equity swap occurred during the year ended December 31, 2015.~~
~~(*4)~~
Changes in investments in joint ventures and associates due to debt-equity swap is 51,227 million ~~Won during the year ended December 31, 2017.~~Won.
For the year ended December 31, 2018
Acquisition
cost January 1,
2018 Share of
profits
(losses) Acquisition Disposal and
others^(*) Dividends Change in
capital Impairment Others December 31,
2018
Kumho Tire Co., Inc.
175,652 98,933 (10,451 ) — (83,286 ) — (5,196 ) — — —
Woori Service Networks Co., Ltd.
108 158 1 — — (2 ) — — — 157
Korea Credit Bureau Co., Ltd.
3,313 5,816 1,087 — — (113 ) — — — 6,790
Korea Finance Security Co., Ltd.
3,267 3,519 (10 ) — — (54 ) 1 — — 3,456
Chin Hung International Inc.
130,779 45,101 1,206 — — — (1,725 ) — 159 44,741
Poonglim Industrial Co., Ltd.
13,916 — — — — — — — — —
STX Corporation
50,760 6,947 (816 ) — (5,865 ) — (266 ) — — —
Saman Corporation
8,521 1,254 (98 ) — — — 35 (177 ) — 1,014
Woori Growth Partnerships New Technology Private Equity Fund
25,847 27,611 950 360 (3,346 ) (484 ) — — — 25,091
2016KIF-IMM Woori Bank Technology Venture Fund
15,000 6,840 — 8,160 — — 300 — — 15,300
K BANK Co., Ltd.
67,343 31,735 (10,705 ) 21,951 — — 144 — 584 43,709
Smart Private Equity Fund No.2
3,000 2,932 (42 ) — — — — — — 2,890
Woori Bank-Company K Korea Movie Asset Fund
3,000 2,957 (257 ) — — — — — — 2,700
Well to Sea No.3 Private Equity Fund
101,992 182,309 22,546 — (508 ) (517 ) (6,437 ) — — 197,393
Partner One Value Up Ist Private Equity Fund
10,000 — (52 ) 10,000 — — — — — 9,948
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership
4,426 — — 4,426 — — — — — 4,426
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund
3,025 — — 3,025 — — — — — 3,025
Nomura-Rifa Private Real Estate Investment Trust No.17
1,000 939 (152 ) — — — — — — 787
Uri Hanhwa Eureka Private Equity Fund
350 — (11 ) 350 — — — — — 339

621,299 417,051 3,196 48,272 (93,005 ) (1,170 ) (13,144 ) (177 ) 743 361,766

(*5))
The ~~Investments~~amount transferred from the investments in ~~Associates reclassified as~~joint ventures and associates to financial assets ~~held for sale amount to 62,571~~at FVTOCI is 83,286 million ~~Won, of which 16,354 million Won was disposed of during the year ended December 31, 2017.~~Won.
For the year ended December 31, 2019
Acquisition
cost January 1,
2019 Share of
profits
(losses) Acquisition Disposal and
others Dividends Change in
capital December 31,
2019
Woori Service Networks Co., Ltd.
108 157 31 — — (2 ) — 186
Korea Credit Bureau Co., Ltd.
3,313 6,790 190 — — (135 ) — 6,845
Korea Finance Security Co., Ltd.
3,267 3,456 (169 ) — — — — 3,287
Chin Hung International Inc.
130,779 44,741 6,426 — — — 9 51,176
Saman Corporation
8,521 1,014 (198 ) — — — 33 849
Woori Growth Partnerships New Technology Private Equity Fund
18,666 25,091 1,466 309 (7,490 ) (164 ) — 19,212
2016KIF-IMM Woori Bank Technology Venture Fund
12,385 15,300 1,193 — (2,615 ) — 1,263 15,141
K BANK Co., Ltd.
73,150 43,709 (18,233 ) 5,807 — — (29 ) 31,254
Smart Private Equity Fund No.2
2,915 2,890 (41 ) — (85 ) — — 2,764
Woori Bank-Company K Korea Movie Asset Fund
3,000 2,700 623 — — — — 3,323
Well to Sea No.3 Private Equity Fund
101,483 197,393 30,343 — — (18,836 ) 123 209,023
Partner One Value Up I Private Equity Fund
10,000 9,948 (40 ) — — — — 9,908
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership
4,576 4,426 — 150 — — — 4,576
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund
4,375 3,025 — 1,350 — — — 4,375
Woori-ShinyoungGrowth-Cap Private Equity Fund I
12,665 — (824 ) 12,665 — — — 11,841
LOTTE CARD Co.,Ltd
346,000 — 63,444 346,000 — — — 409,444
Woori-Q Corporate Restructuring Private Equity Fund
6,129 — (83 ) 6,129 — — — 6,046
PCC-Woori LP Secondary Fund
2,525 — — 2,525 — — — 2,525
Nomura-Rifa Private Real Estate Investment Trust No.17
1,000 787 (136 ) — (651 ) — — —
Uri Hanhwa Eureka Private Equity Fund
350 339 3 — — — — 342
Godo Kaisha Oceanos 1
10,870 — 2 10,870 (15 ) (105 ) 200 10,952
Japanese Hotel Real Estate Private Equity Fund 2
3,291 — — 3,291 — — — 3,291

759,368 361,766 83,997 389,096 (10,856 ) (19,242 ) 1,599 806,360

(3) ~~Financial~~
Summary financial information relating to investments in joint ventures and associates accounted for using the equity method of accounting is as follows (Unit: Korean Won in millions):

   December 31, 2016 December 31, 2018
   Assets    Liabilities    Operating
revenue    Net income
(loss) Assets Liabilities Operating
revenue Net income
(loss)
Woori Blackstone Korea Opportunity No.1 Private Equity Fund
   57,971    427    75,084    38,226
Kumho Tire Co., Inc.
   5,079,740    3,914,306    2,156,667    (53,328 )
Woori Service Networks Co., Ltd.
   4,722    1,782    14,875    801 5,066 1,886 15,803 819
Korea Credit Bureau Co., Ltd.
   71,245    17,322    59,868    3,517 88,797 22,788 78,018 9,901
Korea Finance Security Co., Ltd.
   32,262    9,759    52,657    700 35,155 12,114 60,706 17
Chin Hung International Inc.
   421,710    354,995    578,640    794 412,205 332,268 606,192 6,402
Poonglim Industrial Co., Ltd.
   304,718    323,765    156,770    (15,135 )
STX Engine Co., Ltd.
   865,265    769,481    372,295    (22,978 )
Samho Co., Ltd.
   740,786    489,130    909,927    68,077
STX Corporation
   781,622    1,087,469    1,252,968    (378,782 )
Saman Corporation
   83,380    47,175    72,850    2,746 97,720 69,915 75,825 (869 )
Woori Growth Partnerships New Technology Private Equity Fund
   57,339    493    37    (2,177 ) 109,167 440 5,943 4,117
2016KIF-IMM Woori Bank Technology Venture Fund
   9,005    254    5    (250 ) 73,231 12 16 (1,510 )
K BANK Co., Ltd.
   239,806    5,633    2,927    (12,222 ) 2,024,856 1,807,502 60,039 (69,256 )
Woori Renaissance Holdings Inc.
   127,411    26,703    37,206    33,508
Woori Columbus 1st Private Equity Fund
   811    506    3,764    (450 )
Smart Private Equity Fund No.2
14,502 51 1 (209 )
Woori Bank-Company K Korea Movie Asset Fund
10,805 5 1,663 (299 )
Well to Sea No.3 Private Equity Fund
5,968,591 5,395,307 429,742 39,711
Partner One Value Up Ist Private Equity Fund
42,776 — 326 (224 )
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership
21,200 757 390 (1,268 )
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund
12,014 105 3 (191 )
Nomura-Rifa Private Real Estate Investment Trust No.17
20,197 16,178 10 (228 )
Uri Hanhwa Eureka Private Equity Fund
42,332 181 1 (1,349 )

   December 31, 2017 December 31, 2019
   Assets    Liabilities    Operating
revenue    Net income
(loss) Assets Liabilities Operating
revenue Net income
(loss)
Kumho Tire Co., Inc.
   5,105,107    3,928,327    2,136,569    (61,748 )
Woori Service Networks Co., Ltd.
   4,982    1,780    14,887    1,003 5,742 1,969 17,572 1,322
Korea Credit Bureau Co., Ltd.
   75,504    19,323    68,750    3,580 96,855 30,289 91,200 1,480
Korea Finance Security Co., Ltd.
   33,915    10,461    55,610    1,071 32,574 10,660 61,939 (1,265 )
Chin Hung International Inc.
   341,284    259,454    513,285    28,698 335,147 229,764 499,152 26,617
Poonglim Industrial Co., Ltd.
   241,063    309,925    107,360    (29,812 )
STX Corporation
   595,348    543,458    1,371,272    342,869
Saman Corporation
   98,435    69,929    76,135    (6,096 ) 92,206 66,184 91,088 (485 )
Woori Growth Partnerships New Technology Private Equity Fund
   120,133    485    1,024    (3,199 ) 83,583 330 7,866 6,355
2016KIF-IMM Woori Bank Technology Venture Fund
   32,815    380    6    (1,515 ) 72,768 343 8,939 7,462
K BANK Co., Ltd.
   1,244,270    1,001,121    19,231    (74,403 ) 2,679,968 2,464,168 84,928 (89,779 )
Smart Private Equity Fund No.2
   14,711    51    1    (340 ) 13,872 51 2 (204 )
Woori Bank-Company K Korea Movie Asset Fund
   11,830    2    16    (172 ) 13,294 2 4,532 2,492
Well to Sea No.3 Private Equity Fund
   5,068,424    4,534,957    131,488    162,743 7,073,363 6,470,540 524,319 48,357
Nomura-Rifa Private Real Estate Investment Trust No.17
   20,265    16,507    62    (242 )
Partner One Value Up I Private Equity Fund
42,602 — 457 (175 )
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership
21,208 691 766 (676 )
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund
16,939 124 10 (494 )
Woori-ShinyoungGrowth-Cap Private Equity Fund I
37,642 620 2 (2,679 )
LOTTE CARD Co.,Ltd^(*)
12,936,977 10,659,889 1,366,512 42,538
Woori-Q Corporate Restructuring Private Equity Fund
15,975 823 — (823 )
PCC-Woori LP Secondary Fund
6,498 — — (2 )
Uri Hanhwa Eureka Private Equity Fund
41,950 236 41 (436 )
Godo Kaisha Oceanos 1
70,869 47,960 778 119
Japanese Hotel Real Estate Private Equity Fund 2
16,561 6 — (600 )
(*)
The amount is after reflecting the fair value adjustment that occurred when acquiring the shares and the adjustments that occurred by difference of accounting policies with the Group.
(4)
The entities that the Group has not applied equity method of accounting although the Group’s ownership ~~ratio~~interest is more than 20% as of December 31, ~~2016~~2018 and ~~2017,~~2019, are as follows:

   As of December 31, 2016
   Number of shares owned    Ownership (%)
Orient Shipyard Co., Ltd.^(*)
   465,050    23.0 %
Saenuel Co., Ltd.^(*)
   3,531    37.4 %
E Mirae Tech Co., Ltd.^(*)
   7,696    41.0 %
Jehin Trading Co., Ltd.^(*)
   81,610    27.3 %
NK Eng Co., Ltd.^(*)
   697,033    23.1 %
The season Co., Ltd.^(*)
   18,187    30.1 %
Yuil PESC Co., Ltd.^(*)
   8,642    24.0 %
Youngdong Sea Food Co., Ltd.^(*)
   12,106    24.0 %
Sinseong Trading Co., Ltd.^(*)
   2,584    27.2 %
Reading Doctors Co., Ltd.^(*)
   7,398    35.4 %
PREXCO Co., Ltd.^(*)
   919,972    28.1 %
Hyunwoo International Co., Ltd.^(*)
   59,873    25.9 %
   December 31, 2018
Associate^(*)
   Number of shares owned    Ownership (%)
Orient Shipyard Co., Ltd.
   464,812    21.4
Saenuel Co., Ltd.
   3,531    37.4
E Mirae Tech Co., Ltd.
   7,696    41.0
Jehin Trading Co., Ltd.
   81,610    27.3
The Season Company Co., Ltd.
   18,187    30.1
Yuil PESC Co., Ltd.
   8,642    24.0
CL Tech Co., Ltd.
   13,759    38.6

   As of December 31, 2017
   Number of shares owned    Ownership (%)
Orient Shipyard Co., Ltd.^(*)
   465,050    21.4 %
Saenuel Co., Ltd.^(*)
   3,531    37.4 %
E Mirae Tech Co., Ltd.^(*)
   7,696    41.0 %
Jehin Trading Co., Ltd.^(*)
   81,610    27.3 %
The season Co., Ltd.^(*)
   18,187    30.1 %
Yuil PESC Co., Ltd.^(*)
   8,642    24.0 %
Youngdong Sea Food Co., Ltd.^(*)
   12,106    24.0 %
Sinseong Trading Co., Ltd.^(*)
   2,584    27.2 %
CL Tech Co., Ltd.^(*)
   13,759    38.6 %
Force TEC Co., Ltd.^(*)
   4,780,907    25.8 %
Protronics Co., Ltd.^(*)
   95,921    48.1 %
Instern Co., Ltd.^(*)
   14,296    20.1 %
   December 31, 2019
Associate^(*)
   Number of shares owned    Ownership (%)
Orient Shipyard Co., Ltd.
   464,812    21.4
Saenuel Co., Ltd.
   3,531    37.4
E Mirae Tech Co., Ltd.
   7,837    41.8
Jehin Trading Co., Ltd.
   83,056    27.7
The Season Company Co., Ltd.
   18,283    30.3
Yuil PESC Co., Ltd.
   8,642    24.0
CL Tech Co., Ltd.
   13,759    38.6

(*)
Even though the Group’s ownership interest of the entity is more than 20%, the Group does not have significant influence over the entity since it is going throughwork-out process under receivership, thus it is excluded from the investment in joint ventures and associates.
(5)
As of December 31, ~~2015, 2016~~2017, 2018 and ~~2017,~~2019, the reconciliations from the net assets of the associates ~~based on~~to the ~~ownership ratio~~book value of the ~~Group to its corresponding book value~~shares of the investment in joint ventures and associates are as follows (Unit: Korean Won in millions except for ownership):

As of December 31, 2015
Total net
asset Ownership
(%) Net assets of
associates (or
joint
ventures) cost-book
value
differential^(*1) Impairment Intercompany
transaction
and others Book
value
Woori Blackstone Korea Opportunity Private Equity Fund No.1
211,757 26.4 55,900 — — 144 56,044
Kumho Tire Co., Inc.^(*2)
1,152,161 14.2 163,042 48,459 — 2,549 214,050
Woori Service Networks Co., Ltd.
2,805 4.9 139 — — — 139
Korea Credit Bureau
50,884 9.9 5,043 248 — — 5,291
Korea Finance Security Co., Ltd.
24,738 15.0 3,711 — — — 3,711
United PF 1st Corporate financial stability
1,057,935 17.7 187,538 — — 54 187,592
Chin Hung International Inc.^(*2)
68,132 28.4 19,374 24,566 — (4 ) 43,936
Poonglim Industrial Co., Ltd.^(*2)
(58,065 ) 30.7 (17,837 ) 45,622 (22,472 ) — 5,313
STX Engine Co., Ltd.^(*2)
123,969 29.2 36,230 14,927 — 119 51,276
SamHo Co., Ltd.
182,730 7.8 14,325 — — — 14,325
STX Corporation
50,421 15.0 7,552 24,610 (28,370 ) 459 4,251
Osung LST Co., Ltd.
82,878 11.1 9,238 35,597 (33,839 ) (11 ) 10,985
Saman Corporation
31,636 9.2 2,911 5,610 — — 8,521
Woori Renaissance Holdings
67,203 51.6 34,677 — (6,441 ) 8,885 37,121
Woori Columbus First PEF
67,904 1.9 1,304 6 — (4 ) 1,306

As of December 31, 2016
Total net
asset Ownership
(%) Net assets of
associates (or
joint
ventures) cost-book
value
differential^(*1) Impairment Intercompany
transaction
and others Book
Value
Woori Blackstone Korea Opportunity Private Equity Fund No.1
57,544 26.4 15,191 — — 98 15,289
Kumho Tire Co., Inc.^(*2)
1,055,219 14.2 149,324 48,459 — 2,549 200,332
Woori Service Networks Co., Ltd.
2,940 4.9 145 — — — 145
Korea Credit Bureau
53,923 9.9 5,344 248 — — 5,592
Korea Finance Security Co., Ltd.
22,503 15.0 3,376 — — — 3,376
Chin Hung International Inc.^(*2)
65,387 28.4 18,593 24,565 — (126 ) 43,032
Poonglim Industrial Co., Ltd.^(*2)
(111,156 ) 31.0 (34,463 ) 54,149 (21,062 ) 1,376 —
STX Engine Co., Ltd.
95,784 29.2 28,002 14,954 — 80 43,036
SamHo Co., Ltd.
251,656 7.8 19,729 — — — 19,729
STX Corporation^(*2)
(250,018 ) 9.5 (23,633 ) 24,614 (27,904 ) 26,923 —
Saman Corporation
36,205 9.2 3,326 5,373 — — 8,699
Woori Growth Partnerships New Technology Private Equity Fund
56,846 23.1 13,118 — — — 13,118
2016KIF-IMM Woori Bank Technology Venture Fund
8,751 20.0 1,750 — — 50 1,800
K BANK Co.,Ltd.
234,173 13.0 30,442 — — — 30,442
Woori Renaissance Holdings
100,708 51.6 51,965 — (6,441 ) 8,898 54,422
Woori Columbus First PEF
305 2.0 6 — — (6 ) —
As of December 31, 2017 December 31, 2017
Total net
asset Ownership
(%) Net assets of
associates (or
joint
ventures) Cost-book
value
differential^(*1) Impairment Intercompany
transaction
and others Book
value Total net
asset Ownership
(%) Ownership
portion of net
assets Basis
difference Impairment Intercompany
transaction Book
value
Kumho Tire Co., Inc.^{(*2 and *3)}
1,065,421 14.2 150,767 48,459 (102,843 ) 2,550 98,933
Kumho Tire Co., Inc.^(*)
1,065,421 14.2 150,767 48,459 (102,843 ) 2,550 98,933
Woori Service Networks Co., Ltd.
3,202 4.9 158 — — — 158 3,202 4.9 158 — — — 158
Korea Credit Bureau Co., Ltd.
56,181 9.9 5,568 248 — — 5,816 56,181 9.9 5,568 248 — — 5,816
Korea Finance Security Co., Ltd.
23,454 15.0 3,519 — — — 3,519 23,454 15.0 3,519 — — — 3,519
Chin Hung International Inc.^(*2)
81,686 25.3 20,671 24,565 — (135 ) 45,101
Poonglim Industrial Co., Ltd.^(*2)
(168,154 ) 29.4 (49,446 ) 54,542 (20,504 ) 15,408 —
Chin Hung International Inc.^(*)
81,686 25.3 20,671 24,565 — (135 ) 45,101
Poonglim Industrial Co., Ltd.^(*)
(168,154 ) 29.4 (49,446 ) 54,542 (20,504 ) 15,408 —
STX Corporation
51,890 19.7 10,232 24,614 (27,904 ) 5 6,947 51,890 19.7 10,232 24,614 (27,904 ) 5 6,947
Saman Corporation
28,506 9.2 2,619 5,373 (6,738 ) — 1,254 28,506 9.2 2,619 5,373 (6,738 ) — 1,254
Woori Growth Partnerships New Technology Private Equity Fund
119,648 23.1 27,611 — — — 27,611 119,648 23.1 27,611 — — — 27,611
2016KIF-IMM Woori Bank Technology Venture Fund
32,435 20.0 6,487 — — 353 6,840 32,435 20.0 6,487 — — 353 6,840
K BANK Co., Ltd.
243,149 13.0 31,535 — — 200 31,735 243,149 13.0 31,535 — — 200 31,735
Smart Private Equity Fund No.2
14,660 20.0 2,932 — — — 2,932 14,660 20.0 2,932 — — — 2,932
Woori Bank-Company K Korea Movie Asset Fund
11,828 25.0 2,957 — — — 2,957 11,828 25.0 2,957 — — — 2,957
Well to Sea No.3 Private Equity Fund^(*2)
364,909 50.0 182,366 — — (57 ) 182,309
Well to Sea No.3 Private Equity Fund^(*)
364,909 50.0 182,366 — — (57 ) 182,309
Nomura-Rifa Private Real Estate Investment Trust No.17
3,758

25.0

939

—

—

—

939

3,758 25.0 939 — — — 939

(*1)) ~~It is attributed as the difference between the acquisition cost and the corresponding net asset when the Group acquired the associates.~~
~~(*2)~~
The net asset amount is after ~~considering preferred stocks,~~reflecting debt-equity swap and others.
December 31, 2018
Total net
asset Ownership
(%) Ownership
portion of net
assets Basis
difference Impairment Intercompany
transaction Book
value
Woori Service Networks Co., Ltd.
3,180 4.9 157 — — — 157
Korea Credit Bureau Co., Ltd.
66,009 9.9 6,544 246 — — 6,790
Korea Finance Security Co., Ltd.
23,041 15.0 3,456 — — — 3,456
Chin Hung International Inc.^(*)
79,793 25.3 20,192 24,565 — (16 ) 44,741
Saman Corporation
27,805 9.2 2,556 5,373 (6,915 ) — 1,014
Woori Growth Partnerships New Technology Private Equity Fund
108,727 23.1 25,091 — — — 25,091
2016KIF-IMM Woori Bank Technology Venture Fund
73,219 20.0 14,644 — — 656 15,300
K BANK Co., Ltd.^(*)
290,597 14.1 40,984 2,725 — — 43,709
Smart Private Equity Fund No.2
14,451 20.0 2,890 — — — 2,890
Woori Bank-Company K Korea Movie Asset Fund
10,800 25.0 2,700 — — — 2,700
Well to Sea No.3 Private Equity Fund^(*)
396,248 50.0 198,027 — — (634 ) 197,393
Partner One Value Up Ist Private Equity Fund
42,776 23.3 9,948 — — — 9,948
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership
20,443 20.0 4,089 — — 337 4,426
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund
11,909 25.0 2,977 — — 48 3,025
Nomura-Rifa Private Real Estate Investment Trust No.17
4,019 19.4 780 — — 7 787
Uri Hanhwa Eureka Private Equity Fund
42,151 0.8 339 — — — 339
(*)
The net asset equity amount is after thedebt-for-equity swap.
December 31, 2019
Total net
asset Ownership
(%) Ownership
portion of net
assets Basis
difference Impairment Intercompany
transaction Book
value
Woori Service Networks Co., Ltd.
3,773 4.9 186 — — — 186
Korea Credit Bureau Co., Ltd.
66,566 9.9 6,597 246 — 2 6,845
Korea Finance Security Co., Ltd.
21,914 15.0 3,287 — — — 3,287
Chin Hung International Inc.^(*1)
105,383 25.3 26,646 24,565 — (35 ) 51,176
Saman Corporation
26,022 9.2 2,391 5,373 (6,915 ) — 849
Woori Growth Partnerships New Technology Private Equity Fund
83,253 23.1 19,215 — — (3 ) 19,212
2016KIF-IMM Woori Bank Technology Venture Fund
72,425 20.0 14,485 — — 656 15,141
K BANK Co., Ltd.^{(*1) (*2)}
215,800 14.5 31,248 3,634 (3,634 ) 6 31,254
Smart Private Equity Fund No.2
13,821 20.0 2,764 — — — 2,764
Woori Bank-Company K Korea Movie Asset Fund
13,292 25.0 3,323 — — — 3,323
Well to Sea No.3 Private Equity Fund^(*1)
418,250 50.0 209,041 — — (18 ) 209,023
Partner One Value Up Ist Private Equity Fund
42,602 23.3 9,909 — — (1 ) 9,908
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership
20,517 20.0 4,103 — — 473 4,576
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund
16,815 25.0 4,204 — — 171 4,375
Woori-ShinyoungGrowth-Cap Private Equity Fund I
37,022 31.9 11,841 — — — 11,841
LOTTE CARD Co., Ltd^(*1)
2,047,220 20.0 409,444 — — — 409,444
Woori-Q Corporate Restructuring Private Equity Fund
15,152 38.4 5,813 — — 233 6,046
PCC-Woori LP Secondary Fund
6,498 38.8 2,524 — — 1 2,525
Uri Hanhwa Eureka Private Equity Fund
41,714 0.8 342 — — — 342
Godo Kaisha Oceanos 1
22,909 47.8 10,952 — — — 10,952
Japanese Hotel Real Estate Private Equity Fund 2
16,555 19.9 3,291 — — — 3,291
(*1)
The net asset equity amount is after thedebt-for-equity swap,non-controlling etc.
(*3)2) ~~The Group recognized 102,843 million~~
As a result of conducting an impairment ~~loss~~test on the investment ~~due to a significant and prolonged decline in the stock price~~stocks of the ~~investment below its book value.~~related companies, the recoverable value was less than the carrying amount and thus the impairment loss was recognized.

14.
INVESTMENT PROPERTIES

(1) ~~Investment~~
Details of investment properties are as follows (Unit: Korean Won in millions):

   December 31,
2016 December 31,
2017    December 31,
2018 December 31,
2019
Acquisition cost
   387,675 404,741    416,796 299,802
Accumulated depreciation
   (29,178 ) (33,440 )    (38,600 ) (19,563 )




Net carrying value
   358,497 371,301    378,196 280,239




(2)
Changes in investment properties are as follows (Unit: Korean Won in millions):

   For the year ended
December 31, 2015 For the year ended
December 31, 2016 For the year ended
December 31, 2017    For the years ended December 31
Beginning balance
   357,550 351,496 358,497
   2017 2018 2019
Beginning balance^(*)
   358,497 371,301 178,910
Acquisition
   — 4,428 9,872    9,872 15,195 70,346
Disposal
   — — (458 )    (458 ) (3,045 ) (193 )
Depreciation
   (3,806 ) (3,762 ) (3,902 )    (3,902 ) (4,045 ) (2,225 )
Transfer
   (2,297 ) 6,314 2,472
Transfers from(to) premises and equipment
   2,472 7,623 32,394
Classified to assets held for sale
   — — (371 )    (371 ) (10,056 ) —
Foreign currencies translation adjustments
   49 21 (324 )    (324 ) (5 ) 402
Others
   — — 5,515    5,515 1,228 605




Ending balance
   351,496 358,497 371,301    371,301 378,196 280,239




(*)
199,286 million Won is deducted which was reclassified from the investment properties to premises and equipment at the beginning of the period within the net carrying mount of the previous term.

(3)
Fair value of investment properties ~~which is determined by reference~~amounted to Officially Assessed Reference Land Price (OARLP), announced by Ministry of Land, Transport and Maritime Affairs, and recent market transactions of similar, recently sold parcels nearby the subject properties in order to derive an indication of the most probable sales price (or value) of the subject properties, is amounting to 382,370438,534 million Won and ~~396,587 million~~502,305million Won as of December 31, ~~2016~~2018 and ~~2017,~~2019, respectively. The fair value of investment ~~property, based~~properties has been assessed on the ~~assessment that was independently performed by external appraisal agencies,~~basis of recent similar real estate market price and officially assessed land price in the area of the investment properties, is classified as level 3 on the fair value ~~hierarchy as of December 31, 2016 and 2017.~~hierarchy.

(4)
Rental fee earned from investment properties is amounting to ~~5,629~~4,579 million Won, ~~5,027~~5,080 million Won and ~~4,579~~10,106 million Won for the years ended December 31, ~~2015, 2016~~2017, 2018 and 2019, respectively. Operating expenses directly related to the investment properties where rental fee was earned amounted to 4,466 million Won, 4,120 million Won and 3,010 million Won for the years ended December 31, 2017, ~~respectively.~~2018 and 2019.

~~15.~~(5) ~~PREMISES AND EQUIPMENT~~
~~(1)~~ ~~Premises~~
The lease payments expected to be received in the future under lease contracts as of December 31, 2018 and ~~equipment~~2019 are as follows (Unit: Korean Won in millions):

   December 31, 2016
   Land    Building Properties for
business use Structures in
leased office Construction
in progress    Structures Total
Acquisition cost
   1,488,745    855,332 1,010,141 424,562 18,717    20 3,797,517
Accumulated depreciation
   —    (163,633 ) (820,239 ) (355,604 ) —    (16 ) (1,339,492 )






Net carrying value
   1,488,745    691,699 189,902 68,958 18,717    4 2,458,025






   December 31,
2018    December 31,
2019
Lease payments:

Within a year
   5,454    6,574
More than 1 year and within 2 years
   3,702    4,924
More than 2 years and within 3 years
   3,009    4,018
More than 3 years and within 4 years
   2,619    3,618
More than 4 years and within 5 years
   2,222    3,126
More than 5 years
   —    241




Total
   17,006    22,501




15.
PREMISES AND EQUIPMENT

   December 31, 2017
   Land    Building Properties for
business use Structures in
leased office Construction
in progress    Structures Total
Acquisition cost
   1,487,278    867,804 1,024,186 429,665 64,559    20 3,873,512
Accumulated depreciation
   —    (186,958 ) (844,114 ) (364,878 ) —    (17 ) (1,395,967 )






Net carrying value
   1,487,278    680,846 180,072 64,787 64,559    3 2,477,545






(1)
Details of premises and equipment as of December 31, 2019 are as follows (Unit: Korean Won in millions):
December 31, 2019
Land Building Equipment
and vehicles Leasehold
improvement Construction
in progress Structures Total
Premises and equipment(owned)
1,761,159 802,299 278,016 54,839 1,287 2 2,897,602
Right-of-use asset
— 449,878 17,236 — — — 467,114
Carrying value
1,761,159 1,252,177 295,252 54,839 1,287 2 3,364,716
(2) ~~Changes~~
Details of premises and equipment(owned) as of December 31, 2018 and 2019 are as follows (Unit: Korean Won in millions):
December 31, 2018
Land Building Equipment
and vehicles Leasehold
improvement Construction
in progress Structures Total
Acquisition cost
1,481,871 872,282 1,031,431 446,264 9,099 20 3,840,967
Accumulated depreciation
— (210,370 ) (791,418 ) (388,670 ) — (17 ) (1,390,475 )

Net carrying value
1,481,871 661,912 240,013 57,594 9,099 3 2,450,492

December 31, 2019
Land Building Equipment
and vehicles Leasehold
improvement Construction
in progress Structures Total
Acquisition cost
1,761,159 1,063,756 1,123,101 463,181 1,287 20 4,412,504
Accumulated depreciation
— (261,457 ) (845,085 ) (408,342 ) — (18 ) (1,514,902 )

Net carrying value
1,761,159 802,299 278,016 54,839 1,287 2 2,897,602

(3)
Details of changes in premises and equipment are as follows (Unit: Korean Won in millions):

   For the year ended December 31, 2015 For the year ended December 31, 2017
   Land Building Properties for
business use Structures in
leased office Construction
in progress Structures Total Land Building Equipment
and vehicles Leasehold
improvement Construction
in progress Structures Total
Beginning balance
   1,514,698 706,524 209,588 70,185 102 5 2,501,102 1,488,745 691,699 189,902 68,958 18,717 4 2,458,025
Acquisition
   2,628 21,127 69,230 35,304 757 — 129,046
Disposal
   (10,780 ) (648 ) (847 ) (2,000 ) (313 ) — (14,588 )
Acquisitions
4,755 22,579 59,694 23,420 51,797 — 162,245
Disposals
(1,840 ) (2,593 ) (442 ) (1,231 ) — — (6,106 )
Depreciation
   — (24,846 ) (85,279 ) (36,740 ) — (1 ) (146,866 ) — (26,156 ) (74,223 ) (31,728 ) — (1 ) (132,108 )
Classified to assets held for sale
   (5,109 ) (8,348 ) — — — — (13,457 ) (2,693 ) (1,059 ) 549 — — — (3,203 )
Foreign currencies translation adjustment
   (328 ) (333 ) 265 515 (19 ) — 100
Transfer
   (7,481 ) 9,778 — — — — 2,297 (196 ) (2,134 ) 5,411 — (5,553 ) — (2,472 )
Foreign currencies translation adjustments
(1,493 ) (1,393 ) (2,023 ) (1,315 ) (402 ) — (6,626 )
Others
   — 763 334 12,480 (5 ) — 13,572 — (97 ) 1,204 6,683 — — 7,790


Ending balance
   1,493,628 704,017 193,291 79,744 522 4 2,471,206 1,487,278 680,846 180,072 64,787 64,559 3 2,477,545


   For the year ended December 31, 2016 For the year ended December 31, 2018
   Land Building Properties for
business use Structures in
leased office Construction
in progress Structures    Total Land Building Equipment
and vehicles Leasehold
improvement Construction
in progress Structures Total
Beginning balance
   1,493,628 704,017 193,291 79,744 522 4    2,471,206 1,487,278 680,846 180,072 64,787 64,559 3 2,477,545
Acquisition
   — 15,939 74,336 19,615 21,231 —    131,121
Disposal
   (30 ) (1,474 ) (233 ) (2,623 ) (102 ) —    (4,462 )
Acquisitions
1,372 14,701 76,783 17,527 8,285 — 118,668
Disposals
(29 ) — (5,192 ) (737 ) (187 ) — (6,145 )
Depreciation
   — (24,887 ) (82,445 ) (48,587 ) — —    (155,919 ) — (26,014 ) (76,171 ) (32,162 ) — — (134,347 )
Classified to assets held for sale
   (4,063 ) (251 ) — — — —    (4,314 ) (3,651 ) (2,592 ) — — — — (6,243 )
Foreign currencies translation adjustment
   625 516 307 376 153 —    1,977
Acquisition through business combination
   — — 209 442 — —    651
Transfer
   (1,415 ) (1,557 ) — — (3,087 ) —    (6,059 ) (2,863 ) (4,760 ) 63,432 — (63,432 ) — (7,623 )
Foreign currencies translation adjustments
(236 ) (257 ) (69 ) 323 (126 ) — (365 )
Business combination
— — 969 661 — — 1,630
Others
   — (604 ) 4,437 19,991 — —    23,824 — (12 ) 189 7,195 — — 7,372




Ending balance
   1,488,745 691,699 189,902 68,958 18,717 4    2,458,025 1,481,871 661,912 240,013 57,594 9,099 3 2,450,492




   For the year ended December 31, 2017 For the year ended December 31, 2019
   Land Building Properties for
business use Structures in
leased office Construction
in progress Structures Total Land Building Equipment
and
vehicles Leasehold
improvement Construction
in progress Structures Total
Beginning balance
   1,488,745 691,699 189,902 68,958 18,717 4 2,458,025 1,481,871 661,912 240,013 57,594 9,099 3 2,450,492
Acquisition
   4,755 22,579 59,694 23,420 51,797 — 162,245
Disposal
   (1,840 ) (2,593 ) (442 ) (1,231 ) — — (6,106 )
Acquisitions
186,303 87,667 119,474 28,788 7,315 — 429,547
Disposals
(3,015 ) (2,245 ) (1,203 ) (2,738 ) — — (9,201 )
Depreciation
   — (26,156 ) (74,223 ) (31,728 ) — (1 ) (132,108 ) — (30,766 ) (87,453 ) (27,134 ) — (1 ) (145,354 )
Classified from(to) assets held for sale
   (2,693 ) (1,059 ) 549 — — — (3,203 )
Foreign currencies translation adjustment
   (1,493 ) (1,393 ) (2,023 ) (1,315 ) (402 ) — (6,626 )
Classified to assets held for sale
(21 ) (74 ) — — — — (95 )
Transfer
   (196 ) (2,134 ) 5,411 — (5,553 ) — (2,472 ) 93,956 83,260 3,670 912 (14,886 ) — 166,912
Foreign currencies translation adjustments
880 801 1,459 609 36 — 3,785
Business combination (Note 44)
1,185 74 926 1 — — 2,186
Others
   — (97 ) 1,204 6,683 — — 7,790 — 1,670 1,130 (3,193 ) (277 ) — (670 )


Ending balance
   1,487,278 680,846 180,072 64,787 64,559 3 2,477,545 1,761,159 802,299 278,016 54,839 1,287 2 2,897,602


~~16. INTANGIBLE ASSETS AND GOODWILL~~
(4)
Details ofright-of-use assets as of December 31, 2019 are as follows (Unit: Korean Won in millions):
   December 31, 2019
   Building Equipment and
vehicles Total
Acquisition cost
   615,201 25,563 640,764
Accumulated depreciation
   (165,323 ) (8,327 ) (173,650 )


Net carrying value
   449,878 17,236 467,114


(5)
Details of changes inright-of-use assets as of December 31, 2019 are as follows (Unit: Korean Won in millions):
   December 31, 2019
   Building Equipment and
vehicles Total
Beginning balance
   416,828 18,963 435,791
New contracts
   251,992 8,306 260,298
Termination
   (3,803 ) (178 ) (3,981 )
Depreciation
   (219,743 ) (9,984 ) (229,727 )
Business combination (Note 44)
   5,438 114 5,552
Others
   (834 ) 15 (819 )


Ending balance
   449,878 17,236 467,114


16.
INTANGIBLE ASSETS

(1) ~~Intangible~~
Details of intangible assets are as follows (Unit: Korean Won in millions):

   December 31, 2016 December 31, 2018
   Goodwill    Software Industrial
property
rights Development
cost Others Membership
deposit Total Goodwill Software Industrial
property
rights Development
cost Other
intangible
assets Membership
deposit Construction
in progress Total
Acquisition cost
   124,803    185,202 714 299,031 622,540 26,884 1,259,174 153,602 156,109 1,258 469,226 729,052 27,025 10,415 1,546,687
Accumulated amortization
   —    (149,725 ) (401 ) (160,335 ) (458,088 ) — (768,549 ) — (126,382 ) (696 ) (228,906 ) (589,618 ) — — (945,602 )
Accumulated impairment losses
   —    — — — (88 ) (6,798 ) (6,886 ) — — — — (137 ) (3,428 ) — (3,565 )




Net carrying value
   124,803    35,477 313 138,696 164,364 20,086 483,739 153,602 29,727 562 240,320 139,297 23,597 10,415 597,520




   December 31, 2017
   Goodwill    Software Industrial
property
rights Development
cost Others Membership
deposit Total
Acquisition cost
   108,707    203,418 1,063 413,296 634,150 27,337 1,387,971
Accumulated amortization
   —    (162,746 ) (524 ) (182,846 ) (516,467 ) — (862,583 )
Accumulated impairment losses
   —    — — — (137 ) (6,652 ) (6,789 )




Net carrying value
   108,707    40,672 539 230,450 117,546 20,685 518,599




December 31, 2019
Goodwill Software Industrial
property
rights Development
cost Other
intangible
assets Membership
deposit Construction
in progress Total
Acquisition cost
350,682 174,132 1,576 517,224 862,313 32,583 4,066 1,942,576
Accumulated amortization
— (138,300 ) (884 ) (292,031 ) (638,005 ) — — (1,069,220 )
Accumulated impairment losses
— — — — (25,993 ) (3,253 ) — (29,246 )

Net carrying value
350,682 35,832 692 225,193 198,315 29,330 4,066 844,110

(2) ~~Changes~~
Details of changes in intangible assets are as follows (Unit: Korean Won in millions):

   For the year ended December 31, 2015 For the year ended December 31, 2017
   Goodwill Software Industrial
property
rights Development
cost Others Membership
deposit Total Goodwill Software Industrial
property
rights Development
cost Others Membership
deposit Construction
in progress Total
Beginning balance
   107,541 47,821 328 55,337 60,807 23,894 295,728 124,803 35,477 313 70,697 164,364 20,086 67,999 483,739
Acquisition
   — 7,347 96 16,751 196,139 2,510 222,843
Acquisitions
105 9,722 349 29,133 22,531 1,867 93,716 157,423
Disposal
   — (189 ) — (1,500 ) (12 ) — (1,701 ) — — — — (37 ) (944 ) — (981 )
Amortization
   — (16,809 ) (81 ) (19,233 ) (53,969 ) — (90,092 )
Impairment losses
   — — — — (9 ) (1,911 ) (1,920 )
Amortization^(*)
— (16,258 ) (123 ) (22,534 ) (60,869 ) — — (99,784 )
Impairment loss
— — — — (78 ) (159 ) — (237 )
Transfer
— 7,987 — — — — (7,987 ) —
Foreign currencies
translation adjustment
   (4,016 ) 1 1 2 (476 ) 147 (4,341 ) (16,201 ) (952 ) — 36 (2,742 ) (160 ) (519 ) (20,538 )
Others
   — — — — (711 ) — (711 ) — 4,696 — (91 ) (5,623 ) (5 ) — (1,023 )


Ending balance
   103,525 38,171 344 51,357 201,769 24,640 419,806 108,707 40,672 539 77,241 117,546 20,685 153,209 518,599


   For the year ended December 31, 2016
   Goodwill    Software Industrial
property
rights Development
cost Others Membership
deposit Total
Beginning balance
   103,525    38,171 344 51,357 201,769 24,640 419,806
Acquisition
   —    8,708 64 92,969 30,842 2,306 134,889
Disposal
   —    — — — (23 ) (3,785 ) (3,808 )
Amortization
   —    (15,795 ) (95 ) (18,657 ) (57,803 ) — (92,350 )
Impairment losses
   —    — — — 3,230 (1,585 ) 1,645
Foreign currencies translation adjustment
   7,338    16 — — 853 50 8,257
Acquisition through business combination
   7,857    162 — — — 43 8,062
Others
   6,083    4,215 — 13,027 (14,504 ) (1,583 ) 7,238




Ending balance
   124,803    35,477 313 138,696 164,364 20,086 483,739




(*)
Amortization of other intangible assets amounting to 48,292 million Won is included in other operating expenses.
For the year ended December 31, 2018
Goodwill Software Industrial
property
rights Development
cost Other
intangible
assets Membership
deposit Construction
in progress Total
Beginning balance
108,707 40,672 539 77,241 117,546 20,685 153,209 518,599
Acquisitions
— 6,839 195 20,935 45,205 5,162 97,067 175,403
Disposal
— (4,359 ) — — (196 ) (2,871 ) — (7,426 )
Amortization^(*)
— (14,028 ) (172 ) (46,045 ) (73,913 ) — — (134,158 )
Reversal of impairment loss
— — — — — 674 — 674
Transfer
— — — 188,189 51,672 — (239,861 ) —
Business combination
46,752 763 — — — — — 47,515
Foreign currencies translation adjustment
(1,857 ) (165 ) — — (227 ) (53 ) — (2,302 )
Others
— 5 — — (790 ) — — (785 )

Ending balance
153,602 29,727 562 240,320 139,297 23,597 10,415 597,520

   For the year ended December 31, 2017
   Goodwill Software Industrial
property
rights Development
cost Others Membership
deposit Total
Beginning balance
   124,803 35,477 313 138,696 164,364 20,086 483,739
Acquisition
   105 9,722 349 122,849 22,531 1,867 157,423
Disposal
   — — — — (37 ) (944 ) (981 )
Amortization
   — (16,258 ) (123 ) (22,534 ) (60,869 ) — (99,784 )
Impairment losses
   — — — — (78 ) (159 ) (237 )
Transfer
   — 7,987 — (7,987 ) — — —
Foreign currencies translation adjustment
   (16,201 ) (952 ) — (483 ) (2,742 ) (160 ) (20,538 )
Others
   — 4,696 — (91 ) (5,623 ) (5 ) (1,023 )


Ending balance
   108,707 40,672 539 230,450 117,546 20,685 518,599


(*)
Amortization of other intangible assets amounting to 51,770 million Won is included in other operating expenses.
For the year ended December 31, 2019
Goodwill Software Industrial
property
rights Development
cost Other
intangible
assets Membership
deposit Construction
in progress Total
Beginning balance
153,602 29,727 562 240,320 139,297 23,597 10,415 597,520
Acquisitions
— 13,133 318 41,373 87,538 4,931 8,754 156,047
Disposal
— — — — — (675 ) — (675 )
Amortization^(*1)
— (9,389 ) (188 ) (64,415 ) (54,421 ) — — (128,413 )
Impairment losses^(*2)
— — — — (25,858 ) (939 ) — (26,797 )
Transfer
— — — 7,915 7,188 — (15,103 ) —
Foreign currencies translation adjustment
10,234 1,269 — — 1,023 60 — 12,586
Business combination (Note 44)
186,846 835 — — 43,530 2,143 — 233,354
Others
— 257 — — 18 213 — 488

Ending balance
350,682 35,832 692 225,193 198,315 29,330 4,066 844,110

(*1)
Amortization of other intangible assets amounting to 22,317 million Won is included in other operating expenses.
(*2)
The impairment test for other intangible assets indicates that the recoverable value is less than the carrying amount and thus the impairment loss is recognized.
(3)
Goodwill
1)
Details of allocated goodwill based on each cash-generating unit as of December 31, 2018 and 2019 are as follows (Unit: Korean Won in million):
Cash-generating unit^(*1)
   December 31,
2018    December 31,
2019
Woori Asset Management Corp.
   —    43,036
Woori Global Asset Management Co., Ltd.
   —    2,030
Woori Asset Trust Co., Ltd.
   —    141,780
PT Bank Woori Saudara Indonesia 1906 Tbk^(*2)
   98,229    106,173
WB Finance Co., Ltd^(*3)
   47,681    49,374
Others
   7,692    8,289




Total
   153,602    350,682




(*1)
Goodwill is allocated to the cash-generating unit that will benefit from the synergy effect of the business combination, and the cash-generating unit is generally comprised of the operating orsub-sectors.
(*2)
The Group has acquired Saudara Bank to expand retail sales in Indonesia, and recognized the goodwill as it is expected to strengthen our competitiveness by securing a local sales network in Indonesia.
(*3)
The Group has acquired VisionFund Cambodia to expand Cambodian retail sales, and recognized goodwill based on the economies of scale and acquired customer base.
2)
Impairment test
The recoverable amount of the cash-generating unit is measured at larger amount among the fair value less costs to sell or the value to use.
The net fair value is calculated by deducting costs of disposal from the amount received from the sale of the cash-generating unit in an arm’s length transaction between the parties with reasonable judgment and willingness to negotiate. In case of difficulty in measuring this amount, the sale amount of a similar cash-generating unit in the past market is calculated by reflecting the characteristics of the cash-generating unit. If reliable information related to fair value less costs to sell is not available, value in use is considered as recoverable amount. Value in use is the present value of future cash flows expected to be generated by the cash-generating unit. Future cash flows are estimated based on the latest financial budget approved by the management, with an estimated period of up to five years. The Group estimates cash flows based on an annual growth rate of up to 4.0% in relation to cash flows after the longest period. The main assumptions used to estimate cash flows are about the size of the market and the share of the group. The appropriate discount rate for discounting future cash flows is thepre-tax discount rate, including assumptions about risk-free interest rates, market risk premium, and systemic risk of cash-generating units. The impairment test, which compares the carrying amount and recoverable amount of the cash-generating unit to which goodwill has been allocated, is conducted every year and every time an impairment sign occurs.
Category
   Woori Asset
Management Corp.    Woori Global
Asset Management
Co., Ltd    PT Bank Woori
Saudara
Indonesia 1906
Tbk    WB Finance
Co., Ltd
Discount rate (%)
   7.3    8.8    18.3    17.3
Terminal growth rate (%)
   1.0    1.0    4.0    3.0
Recoverable amount
   145,820    45,367    952,692    133,149
Carrying amount
   106,735    29,577    577,075    93,143
As a result of the impairment test on goodwill, it is determined that the carrying amount of the cash-generating unit to which the goodwill has been allocated will not exceed the recoverable amount.
17. ASSETS HELD FOR ~~SALE~~DISTRIBUTION (SALE)
As of the end of the current term, the Group is planning to sell lands, buildings and machinery items that are from subsidiary companies, Seari First Securitization Specialty Co., Ltd., Namjong 1^st Securitization Specialty Co., Ltd., Bukgeum First Securitization First Specialty Co., Ltd. and Bukgeum Second Securitization Specialty Co., Ltd., and therefore they are classified as assets held for sale. In addition, tangible assets that are highly likely to be sold within another year are classified as held for sale.
Assets held for ~~sale~~distribution (sale) are as follows (Unit: Korean Won in millions):

   December 31,
2017    December 31,
2016
Investments in joint ventures and associates^(*)
   46,217    —
Premises and equipment
   2,407    2,342




Total
   48,624    2,342




   December 31,
2018    December 31,
2019
Lands
   7,280    5,164
Buildings
   7,736    4,815
Others
   2,896    577




Total
   17,912    10,556




The Group measured assets held for sale at the lower of their net fair value or carrying amount
~~(*)~~ The shares of STX Engine Co., Ltd. owned by the Group are reclassified as assets held for sale, as the creditor financial institutions committee has entered into a contract with UAMCO., Ltd for the year ended December 31, 2017, to sell STX Engine Co., Ltd. shares.
18. ASSETS SUBJECT TO LIEN AND ASSETS ACQUIRED THROUGH FORECLOSURES

(1)
Assets subjected to lien are as follows (Unit: Korean Won in millions):


December 31, ~~2016~~2018

Collateral given to
   Amount
Reason for collateral
Loan at amortized cost and ~~receivables~~other financial assets
Due from banks on time in local currency
Daishin AMC and others
1,500
Right of pledge

Due from banks in local ~~currency~~currencies

Samsung Securities Co., Ltd. and others
   ~~24,589~~38,112
Margin deposit for futures ~~and options and others~~or option

Due from banks in foreign currencies

Korea Investment & Securities Co., Ltd. and others
   ~~227,249~~202,156
Foreign margin deposit for future or option and others
Financial assets at ~~FVTPL~~FVTOCI

~~Industrial and~~Korean financial institutions’ debt securities and others

~~Yuanta Securities~~The BOK and others
   ~~473,476~~2,919,042
~~Substitute securities~~Settlement risk and others
~~AFS financial assets~~

Korean ~~treasury and government agencies bonds~~financial institutions’ debt securities

~~Korea Securities Depository and others~~Banco Bilbao Vizcaya Argentaria, S.A
   ~~2,546,683~~33,588
Related to bonds sold under repurchase agreements^(*)
Securities at amortized cost
Korean treasury and government bonds
Korea Securities Depository
5,552
Related to bonds sold under repurchase agreements (*)

~~Financial institutions debt securities~~Korean treasury and government bonds and others

The BOK and
others
   ~~836,522~~6,382,188
Settlement risk and others
~~HTM financial assets~~Premises and equipment

~~Korean treasury~~Land and ~~government agencies bonds~~building
~~Korea Securities Depository and others~~
~~7,133~~
~~Related to bonds sold under repurchase agreements~~^(*)
~~Korean treasury and government agencies bonds and others~~
~~The BOK and~~
~~others~~
~~6,185,295~~
~~Settlement risk and others~~
~~Lands and buildings~~

Credit Counselling & Recovery Service and others
   ~~6,310~~5,987
~~Leasehold rights~~Right to collateral and others



   Total    ~~10,307,257~~9,588,125



(*)
The Group has the agreements to repurchase the sold assets at the predetermined price or the price that includes the rate of return and to provide the guarantee on the assets. The transferee has the right to sell or to provide as guarantee. Therefore, the Group does not derecognize the assets, but recognizes the relevant amounts as liability (bonds sold under repurchase agreements).

December 31, ~~2017~~2019

Collateral given to
   Amount
Reason for collateral
~~Loan and receivables~~Financial assets at FVTPL

~~Due from banks on time in local currency~~Korean treasury and government bonds and others

~~Bank of China~~Nonghyup bank
19,720
Related to bonds sold under repurchase agreements (*)
Korean corporate debt securities
Kookmin bank and
others
   ~~6,629~~168,327
~~Collaterals~~Related to bonds sold under repurchase agreements (*)
Korean corporate debt securities
Eugene investment &
futures co., Ltd. .
3,008
Collateral for ~~issuing letter of guarantee~~futures transaction
Korean financial institutions’ debt securities and others
Nonghyup bank and others
219,938
Related to bonds sold under repurchase agreements (*)
Financial assets at FVTOCI
Korean financial institutions’ debt securities and others
BOK and others
5,127,383
Settlement risk
Foreign corporate debt securities
Spain BBVA and others
56,975
Related to bonds sold under repurchase agreements (*)
Korean corporate debt securities
Nonghyup bank futures and others
9,042
Collateral for futures transaction
Securities at amortized cost
Korean treasury and government bonds
Korea Securities Depository
5,570
Related to bonds sold under repurchase agreements (*)
Korean treasury and government bonds and others
The BOK and others
6,190,630
Settlement risk and others
Foreign financial institutions’ debt securities
NATIXIS and others
37,271
Related to bonds sold under repurchase agreements (*)
Loan at amortized cost and other financial assets

Due from banks in local currency

~~Samsung Securities Co., Ltd.~~Branch of IBK at Phnom Penh and others
   ~~10,809~~11,352
~~Margin deposit~~Collateral deposits for ~~futures or option~~local currency borrowings

Due from banks in ~~foreign~~local currencies

Daishin AMC and others
1,500
Right of pledge
Other due from banks in local currencies Samsung Securities Co., Ltd. and others 17,345 Margin deposit for futures or option
Other due from banks in foreign currencies Korea Investment & Securities Co., Ltd. and others
   ~~9,136~~180,919
Foreign margin deposit for future or option and others
~~Financial assets at FVTPL~~

~~Financial institutions debt securities and others~~
Foreign currency loans
~~Yuanta Securities Co., Ltd.~~Industrial and ~~others~~
Commercial Bank of China    ~~501,523~~82,594
~~Substitute securities and others~~
~~AFS financial assets~~
~~Corporate bonds~~
~~Korea Securities Depository and others~~
~~9,998~~
Related to bonds sold under repurchase agreements⁽^*^(*)
~~Korean treasury~~Premises and ~~government agencies bonds and others~~
~~The BOK and~~
~~others~~
~~1,570,608~~
~~Settlement risk and others~~
~~HTM financial assets~~
~~Korean treasury and government agencies bonds~~
~~Korea Securities Depository~~
~~5,436~~
~~Related to bonds sold under repurchase agreements~~⁽^*⁾
~~Financial institutions debt securities and others~~
~~The BOK and~~
~~others~~
~~7,605,292~~
~~Settlement risk and others~~
~~Lands and buildings~~
equipment Land and building
Credit Counselling & Recovery Service and others
   ~~6,186~~689    ~~Leasehold rights~~Right to collateral and others




Total    ~~9,725,617~~12,132,263





(*)
The Group ~~enters into~~has the agreements to repurchase ~~agreements~~the sold assets at the predetermined price or ~~original sale~~the price ~~added with certain~~that includes the rate of return ~~after~~and to provide the ~~disposal of securities. In this regards,~~guarantee on the ~~securities are provided~~assets. The transferee has the right to sell or to provide as ~~collaterals, and~~guarantee. Therefore, the ~~purchasers are eligible to dispose or provide them as collateral. Therefore, as such securities have been transferred~~Group does not derecognize the assets, but ~~have not been derecognized, the Group~~ recognizes the relevant ~~amount~~amounts as liability ~~(bond~~(bonds sold under repurchase agreements).

(2) ~~The carrying amounts~~
As of ~~buildings~~December 31, 2018 and 2019 there is no asset acquired through ~~foreclosure are as follow (Unit: Korean Won in millions):~~foreclosures.

   December 31,
2016    December 31,
2017
Land
   4,138    332
Building
   1,852    44
Properties not used in business
   202    —




Total
   6,192    376




(3) ~~Loaned securities~~
Securities loaned are as follows (Unit: Korean Won in millions):

      December 31,
2016    December 31,
2017
Loaned to
Financial assets at FVTPL
   Korean Equity securities    4,459    —
Samsung Securities Co., Ltd. and others
AFS financial assets
   Korean treasury and government agencies bonds and others    493,579    170,256
Korea Securities Depository and others





Total
      498,038    170,256





      December 31,
2018    December 31,
2019
Loaned to
Financial assets at FVTOCI
   Korean financial institutions’ debt securities and others    40,029    80,737
Korea Securities Finance Corporation
~~Loaned securities~~
Securities loaned are lending of specific securities to borrowers who agree to return the same ~~quantity~~amount of the same security at the end of lending period. As the Group does not derecognize these securities, there are no liabilities ~~related~~recognized through such transactions relates to ~~loaned securities.~~securities loaned.

(4)
Collaterals held that can be disposed and~~re-collateralized~~re-subjected to lien regardless of defaults of counterparties
Fair values of collaterals held that can be disposed andre-subjected to lien regardless of defaults of counterparties as of December 31, ~~2016~~2018 and ~~2017~~2019 are as follows (Unit: Korean Won in millions):

~~December 31, 2016~~

December 31, 2018
Fair values of collaterals

Fair values of collaterals were disposed
orre-subjected to lien
Securities
   ~~8,746,101~~ 12,262,041 —
December 31, 2019
Fair values of collaterals Fair values of collaterals were disposed
orre-subjected to lien
Securities
9,340,517 —
19. OTHER ASSETS
Details of other assets are as follows (Unit: Korean Won in millions):
   December 31,
2018    December 31,
2019
Prepaid expenses
   161,129    135,010
Advance payments
   18,467    78,306
Others
   18,057    20,330




Total
   197,653    233,646




20. FINANCIAL LIABILITIES AT FVTPL
(1)
Financial liabilities at FVTPL are as follows (Unit: Korean Won in millions):
   December 31,
2018    December 31,
2019
Financial instruments at fair value through profit or loss mandatorily measured at fair value
   2,117,919    2,870,676
Financial liabilities at fair value through profit or loss designated as upon initial recognition
   164,767    87,626




Total
   2,282,686    2,958,302




(2)
Financial liabilities at fair value through profit or loss mandatorily measured at fair value are as follows (Unit: Korean Won in millions):
   December 31,
2018    December 31,
2019
Deposits

Gold banking liabilities
   27,058    27,530
Derivative liabilities
   2,090,861    2,843,146




Total
   2,117,919    2,870,676




(3)
Financial liabilities at fair value through profit or loss designated as upon initial recognition as of December 31, 2018 and 2019 are as follows (Unit: Korean Won in millions):
   December 31,
2018    December 31,
2019
Equity-linked securities

Equity-linked securities in short position
   164,767    87,626
Financial liabilities at fair value through profit or loss designated as upon initial recognition are designated in order to eliminate or significantly reduce accounting mismatch arising from recognition or measurement.
(4)
There are no accumulated changes in credit risk adjustments to financial liabilities at fair value through profit or loss designated as upon initial recognition.
The adjustment to reflect Group’s credit risk is considered in measuring the fair value of equity-linked securities index. The Group’s credit risk is determined by adjusting credit spread observed in credit rating of Group.
(5)
The difference between carrying amount and maturity amount of financial liabilities at fair value through profit or loss designated as upon initial recognition (Financial liabilities designated as at FVTPL) are as follows (Unit: Korean Won in millions):
   December 31,
2018 December 31,
2019
Carrying amount
   164,767 87,626
Nominal amount at maturity
   217,280 97,503


Difference
   (52,513 ) (9,877 )


(6)
Changes in equity in relation to financial liabilities at fair value through profit or loss designated as upon initial recognition
The cumulative gain or loss realized as a result of the derecognition of financial liabilities designated as at fair value through profit or loss that is presented in other comprehensive income and transferred within equity is 4 million (after income tax expense) Won for the year ended December 31, 2018.
21. DEPOSITS DUE TO CUSTOMERS
Details of deposits due to customers by type are as follows (Unit: Korean Won in millions):
   December 31,
2018 December 31,
2019
Deposits in local currency:

Deposits on demand
   11,076,417 8,655,228
Deposits at termination
   204,051,570 224,115,771
Mutual installment
   30,783 28,574
Deposits on notes payables
   1,891,556 2,174,995
Deposits on CMA
   137,316 150,300
Customer deposit for security investment
   30,000 —
Certificate of deposits
   6,510,571 973,625
Other deposits
   1,409,505 1,451,470


Sub-total
   225,137,718 237,549,963


Deposits in foreign currency:

Deposits in foreign currencies
   23,626,234 27,143,710


Present value discount
   (73,013 ) (8,095 )


Total
   248,690,939 264,685,578


22. BORROWINGS AND DEBENTURES
(1)
Details of borrowings are as follows (Unit: Korean Won in millions):

December 31, 2018

Lenders
   Interest
rate (%)    Amount
Borrowings in local currency:

Borrowings from The BOK
The BOK    0.5 ~ 0.8    1,335,459
Borrowings from government funds
Small Enterprise And Market Service and others    0.0 ~ 3.5    1,771,379
Others
The Korea Development Bank and others    0.0 ~ 4.0    4,716,231


Sub-total
      7,823,069


Borrowings in foreign currencies:

Borrowings in foreign currencies
The Export-Import Bank of Korea and others    0.0 ~ 7.5    7,308,857
Offshore borrowings in foreign currencies
JPMORGAN CHASE BANK    2.9    33,543


Sub-total
      7,342,400


Bills sold
Others    0.0 ~ 1.8    19,336
Call money
Bank and others    0.0 ~ 7.3    975,358
Bonds sold under repurchase agreements
Other financial institutions    0.8 ~ 12.7    42,907
Present value discount
      (84 )


Total
      16,202,986


December 31, 2019

Lenders
   Interest rate
(%)    Amount
Borrowings in local currency:

Borrowings from The BOK
The BOK    0.5 ~ 0.8    1,770,726
Borrowings from government funds
Small Enterprise And Market Service and others    0.0 ~ 2.8    1,844,798
Others
The Korea Development Bank and others    0.0 ~ 5.0    6,070,201


Sub-total
      9,685,725


Borrowings in foreign currencies(*):

Borrowings in foreign currencies
The Export-Import Bank of Korea and others    (0.3) ~ 8.3    8,566,872
Offshore borrowings in foreign currencies
HSBC, HKG    3.0    34,734


Sub-total
      8,601,606


Bills sold
Others    0.0 ~ 1.6    9,367
Call money
Bank and others    (0.3) ~ 3.5    133,519
Bonds sold under repurchase agreements
Other financial institutions    1.4 ~ 12.7    569,002
Present value discount
      (299 )


Total
      18,998,920


(*)
Included borrowing in foreign currencies under cash flow hedge amounting to 34,443 million Won as of December 31, 2019.
(2)
Details of debentures are as follows (Unit: Korean Won in millions):
   December 31, 2018 December 31, 2019
   Interest
rate (%)    Amount Interest
rate (%)    Amount
Face value of bond(*):

Ordinary bonds
   1.6 ~ 4.5    22,432,183 0.0 ~ 4.3    23,207,600
Subordinated bonds
   3.0 ~ 12.6    5,358,838 2.1 ~ 5.9    6,732,687
Other bonds
   1.9 ~ 17.0    974,230 1.2 ~ 17.0    942,421




Sub-total
      28,765,251    30,882,708




Discounts on bonds
      (29,389 )    (24,653 )




Total
      28,735,862    30,858,055




(*)
Included debentures under fair value hedge amounting to 2,956,565 million Won and 3,151,172 million Won as of December 31, 2018 and 2019, respectively. Debentures under cash flow hedge amounting to 823,219 million Won and 829,082 million Won are also included as of December 31, 2018 and 2019, respectively.
23. PROVISIONS
(1)
Details of provisions are as follows (Unit: Korean Won in millions):
   December 31,
2018    December 31,
2019
Asset retirement obligation
   67,200    66,485
Provisions for guarantees^(*1)
   89,761    92,486
Provisions for unused loan commitments
   121,535    112,554
Provisions for customer reward credits^(*2)
   49,180    —
Other provisions^(*3)
   63,637    172,455




Total
   391,313    443,980




(*1)
Provisions for guarantees includes provision for financial guarantee of 47,817 million Won and 62,764 million Won as of December 31, 2018 and 2019, respectively.
(*2)
The provisions for existing points that are paid to credit card members and others have been reclassified to other liabilities.
(*3)
Other provisions consist of provision for litigation, loss compensation and others.
(2)
Changes in provisions for guarantees and unused loan commitments are as follows (Unit: Korean Won in millions):
1) Provisions for guarantees
For the year ended
December 31, 2017
Beginning balance
238,117
Provisions provided
4,876
Provisions used and others
(24,898 )
Reversal of unused amount
(60,300 )
Foreign currencies translation adjustments
9
Others
25,443
Ending balance
183,247
   For the year ended December 31, 2018
   Stage1 Stage2 Stage3 Total
Beginning balance^(*1)
   47,132 18,281 127,511 192,924
Transfer to12-month expected credit loss
   92 (92 ) — —
Transfer to expected credit loss for the entire period
   (237 ) 91,008 (90,771 ) —
Transfer to credit-impaired financial assets
   (38 ) (29 ) 67 —
Provisions used
   (20,429 ) — — (20,429 )
Net reversal of unused amount
   (4,866 ) (75,410 ) (25,709 ) (105,985 )
Others^(*2)
   23,249 2 — 23,251


Ending balance
   44,903 33,760 11,098 89,761


(*1)
The beginning balance was restated in accordance with IFRS 9.
(*2)
Others have occurred as a result of new financial guarantee contract valued at initial fair value.
   For the year ended December 31, 2019
   Stage1 Stage2 Stage3 Total
Beginning balance
   44,903 33,760 11,098 89,761
Transfer to12-month expected credit loss
   13,568 (13,568 ) — —
Transfer to expected credit loss for the entire period
   (317 ) 532 (215 ) —
Transfer to credit-impaired financial assets
   (30 ) (32 ) 62 —
Provisions used
   (27,711 ) — — (27,711 )
Net provision (reversal) of unused amount
   (14,400 ) 5,611 4,437 (4,352 )
Others^(*)
   34,788 — — 34,788


Ending balance
   50,801 26,303 15,382 92,486


(*)
Others have occurred as a result of new financial guarantee contract valued at initial fair value.
2) Provisions for unused loan commitment
For the year ended
December 31, 2017
Beginning balance
87,909
Provisions provided
2,028
Provisions used and others
(68 )
Reversal of unused amount
(23,744 )
Foreign currencies translation adjustments and others
(10 )
Ending balance
66,115
   For the year ended December 31, 2018
   Stage1 Stage2 Stage3 Total
Beginning balance^(*)
   75,232 27,875 1,878 104,985
Transfer to12-month expected credit loss
   7,770 (7,396 ) (374 ) —
Transfer to expected credit loss for the entire period
   (2,376 ) 2,525 (149 ) —
Transfer to credit-impaired financial assets
   (213 ) (1,579 ) 1,792 —
Net provision(reversal) of unused amount
   (5,813 ) 23,860 (1,521 ) 16,526
Others
   24 — — 24


Ending balance
   74,624 45,285 1,626 121,535


(*)
The beginning balance was restated in accordance with IFRS 9.
   For the year ended December 31, 2019
   Stage1 Stage2 Stage3 Total
Beginning balance
   74,624 45,285 1,626 121,535
Transfer to12-month expected credit loss
   11,771 (11,024 ) (747 ) —
Transfer to expected credit loss for the entire period
   (1,813 ) 1,945 (132 ) —
Transfer to credit-impaired financial assets
   (213 ) (275 ) 488 —
Net provision(reversal) of unused amount
   (19,394 ) 7,233 3,117 (9,044 )
Others
   63 — — 63


Ending balance
   65,038 43,164 4,352 112,554


(3)
Changes in asset retirement obligation are as follows (Unit: Korean Won in millions):
   For the years ended December 31
       2017         2018         2019
Beginning balance
   58,076 61,872 67,200
Provisions provided
   2,225 1,489 2,729
Provisions used
   (1,283 ) (913 ) (2,276 )
Reversal of provisions unused
   (733 ) (1,038 ) (2,926 )
Amortization
   428 564 435
Increase in restoration costs and others
   3,159 5,226 994
Business Combination (Note 44)
   — — 329


Ending balance
   61,872 67,200 66,485


The amount of the asset retirement obligation is the present value of the best estimate of future expected expenditure to settle the obligation – arising from leased premises as of December 31, 2019, discounted by appropriate discount rate. The restoration cost is expected to occur by the end of each premise’s lease period, and the Group has used average lease period of each category of leases terminated during the past years in order to rationally estimate the lease period. In addition, the Group used average amount of actual recovery cost for the past 3 years and the inflation rate for last year in order to estimate future recovery cost.
(4)
Changes in other provisions are as follows (Unit: Korean Won in millions):
   For the years ended December 31, 2017
   Provisions for
customer
reward credits Other
provisions Total
Beginning balance
   22,093 22,282 44,375
Provisions provided
   62,593 42,042 104,635
Provisions used
   (84,979 ) (8,014 ) (92,993 )
Reversal of unused amount
   — (77 ) (77 )
Foreign currencies translation adjustments
   — (249 ) (249 )
Transfer^(*)
   21,808 — 21,808
Others
   18,930 2,807 21,737


Ending balance
   40,445 58,791 99,236


(*)
Provision for customer reward credits have increased for the Group due to the point transfer from partners during the year ended in December 31, 2017.
   For the year ended December 31, 2018
   Provisions for
customer
reward credits Other
provisions Total
Beginning balance
   40,445 58,791 99,236
Provisions provided
   70,138 8,384 78,522
Provisions used
   (98,170 ) (6,940 ) (105,110 )
Reversal of unused amount
   — (52 ) (52 )
Foreign currencies translation adjustments
   — (194 ) (194 )
Transfer^(*1)
   9,228 — 9,228
Others
   27,539 3,648 31,187


Ending balance^(*2)
   49,180 63,637 112,817


(*1)
Provision for customer reward credits have increased for the Group due to the point transfer from partners during the year ended in December 31, 2018.
(*2)
The provisions for existing points that are paid to credit card members and others have been reclassified to other liabilities.


For the year ended
December 31, ~~2017~~
2019
   Other provision
~~Fair values of collaterals~~Beginning balance

~~Fair values of collaterals were disposed~~
or~~re-subjected~~ ~~to lien~~
63,637
~~Securities~~Provisions provided
   ~~17,671,490~~ 109,875
Provisions used
   — (6,123 )
Reversal of provisions unused
(171 )
Foreign currencies translation adjustments
1,193
Others
224
Business combination (Note 44)
3,820
Ending balance
172,455
~~19. OTHER ASSETS~~
~~Other assets are as follows (Unit: Korean Won in millions):~~

   December 31,
2016    December 31,
2017
Prepaid expenses
   111,445    130,245
Advance payments
   1,944    18,363
Non-operative assets
   6,192    376
Others
   9,265    9,420




Total
   128,846    158,404




~~20. FINANCIAL LIABILITY AT FVTPL~~
~~(1)~~ ~~Financial liabilities at FVTPL are as follows (Unit: Korean Won in millions):~~

   December 31,
2016    December 31,
2017
Financial liabilities held for trading
   3,036,478    3,176,113
Financial liabilities designated at FVTPL
   766,880    251,796




Total
   3,803,358    3,427,909




~~(2)~~ ~~Financial liabilities held for trading are as follows (Unit: Korean Won in millions):~~

   December 31,
2016    December 31,
2017
Deposits due to Customers:

Gold banking liabilities
   26,501    25,964
Derivative liabilities
   3,009,977    3,150,149




Total
   3,036,478    3,176,113




~~(3)~~ ~~Financial liabilities designated at FVTPL are as follows (Unit: Korean Won in millions):~~

   December 31,
2016    December 31,
2017
Equity linked securities index:

Equity linked securities index in short position
   673,906    160,057
Debentures:

Debentures in local currency
   92,974    91,739




Total
   766,880    251,796




~~(4)~~ ~~Credit risk adjustments to financial liabilities designated at FVTPL are as follows (Unit: Korean Won in millions):~~

   December 31,
2015 December 31,
2016 December 31,
2017
Financial liabilities designated at FVTPL subject to credit risk adjustments
   854,862 766,880 251,796
Credit risk adjustments^(*1)
   (433 ) (8 ) (254 )
Accumulated changes in credit risk adjustments^(*2)
   311 349 133
~~(*1)~~ The amounts in the tabular disclosure relating to Credit risk adjustments at 31 December 2016 and at 31 December 2015 have been restated by 811 million Won and 109 million Won, respectively, due to an error in the previous year’s disclosure.
~~(*2)~~ The amounts in the tabular disclosure relating to Accumulated changes in credit risk adjustments at 31 December 2016 and at 31 December 2015 have been restated by 16,139 million Won and 15,327 million Won, respectively, due to an error in the previous year’s disclosure.
Credit risk adjustments are applied to reflect the Group’s own credit risk when measuring the fair value of derivative liabilities. The methodology to determine the adjustment incorporates the Group’s credit spread as observed through credit ratings.

(5) ~~The differences between financial liabilities at FVTPL’s carrying amount and nominal amount at maturity are as follows (Unit: Korean Won in millions):~~
Others

   December 31,
2016 December 31,
2017
Carrying amount
   766,880 251,796
Nominal amount at maturity
   902,375 255,408


Difference
   (135,495 ) (3,612 )


~~21. DEPOSITS DUE TO CUSTOMERS~~
~~Deposits sorted by interest type are as follows (Unit: Korean Won in millions):~~

   December 31,
2016 December 31,
2017
Deposits in local currency

Demand deposits
   9,491,680 9,349,070
Time deposits
   183,723,369 194,292,679
Mutual funds
   37,128 34,055
Deposits on notes payables
   943,446 1,323,679
Deposits on CMA
   203,013 164,431
Certificate of deposits
   3,836,430 4,436,443
Other deposits
   1,360,176 1,451,841


Sub-total
   199,595,242 211,052,198


Deposits in foreign currencies
   21,453,096 23,682,896
Present value discount
   (27,927 ) (40,010 )


Total
   221,020,411 234,695,084


~~22. BORROWINGS AND DEBENTURES~~
~~(1)~~ ~~Borrowings are as follows (Unit: Korean Won in millions):~~


December 31, 2016


Lenders
   Interest
rate (%)    Amount
Borrowings in local currency:

Borrowings from the Bank of Korea
   The Bank of Korea    0.5 ~ 0.8    1,598,553
Borrowings from government funds
   Small and Medium Business Corporation and others    0.0 ~ 3.5    1,534,807
Others
   Seoul Metropolitan Government and others    0.0 ~ 3.8    3,922,878


Sub-total
         7,056,238


Borrowings in foreign currencies:

Borrowings in foreign currencies
   The Export-Import Bank of Korea and others    0.0 ~ 5.2    7,737,237
Offshore borrowings in foreign currencies
   Wells Fargo    1.4    18,128


Sub-total
         7,755,365


Bills sold
   Others    0.0 ~ 1.6    26,895
Call money
   Bank and others    0.0 ~ 5.1    1,926,779
Bonds sold under repurchase agreements
   Other financial institutions    0.0 ~ 4.5    2,004,905
Present value discount
         (667 )


Total
         18,769,515



December 31, 2017


Lenders
   Interest
rate (%)    Amount
Borrowings in local currency:

Borrowings from The BOK
   The BOK    0.5 ~ 0.8    1,404,087
Borrowings from government funds
   Small Enterprise And Market Service and others    0.0 ~ 2.9    1,723,340
Others
   The Korea Development Bank and others    0.0 ~ 3.2    3,957,421


Sub-total
         7,084,848


Borrowings in foreign currencies:

Borrowings in foreign currencies
   The Export-Import BOK and others    0.0 ~ 6.8    6,996,551
Offshore borrowings in foreign currencies
   Commonwealth Bank    1.8    28,285


Sub-total
         7,024,836


Bills sold
   Others    0.0 ~ 1.2    36,953
Call money
   Bank and others    1.5 ~ 2.7    635,061
Bonds sold under repurchase agreements
   Other financial institutions    0.6 ~ 12.7    3,173
Present value discount
         (165 )


Total
         14,784,706


~~(2)~~ ~~Debentures are as follows (Unit: Korean Won in millions):~~

   December 31, 2016 December 31, 2017
   Interest
rate (%)    Amount Interest
rate (%)    Amount
Face value of bond^(*)

Ordinary bonds
   1.5 ~ 11.8    18,268,403 1.5 ~ 5.8    22,468,908
Subordinated bonds
   3.0 ~ 12.6    5,327,335 3.4 ~ 12.6    4,781,301
Other bonds
   17.0    4,006 1.6 ~ 17.0    649,615




Sub-total
      23,599,744    27,899,824




Discounts on bond
      (34,295 )    (30,173 )




Total
      23,565,449    27,869,651




~~(*)~~ Included debentures under fair value hedge relationships are 3,610,193 million Won and 3,102,386 million Won as of December 31, 2016 and 2017, respectively. Also, debentures under cash flow hedge amounting to 699,029 million Won are included as of December 31, 2017
~~23. PROVISIONS~~
~~(1)~~ ~~Provisions are as follows (Unit: Korean Won in millions):~~

   December 31, 2016    December 31, 2017
Asset retirement obligation
   58,076    61,872
Provision for guarantee^(*1)
   238,117    183,247
Provision for loan commitments
   87,909    66,115
Provisions for customer reward credits
   22,093    40,445
Other provisions^(*2)
   22,282    58,791




Total
   428,477    410,470




~~(*1)~~ ~~Provision for guarantee includes provision for financial guarantee of 67,557 million Won and 71,697 million Won as of December 31, 2016 and 2017, respectively.~~
~~(*2)~~ ~~Other provisions consist of provision for litigation, provision for loss recovery, and others.~~

~~(2)~~1) ~~Changes~~
As of September 23, 2019, the Group temporarily suspended thewon-payment business due to tightened U.S. sanctions on Iran while it was ongoing to settle trade transactions between Korea and Iran. In connection with these services, the Group is currently being investigated by US government agencies including US prosecutors (United States Attorney’s Office and New York State Attorney General’s Office) and Office of Foreign Assets Control as to whether the Group has violated United States laws by participating in ~~provisions except for asset retirement obligation are as follows (Unit: Korean Won in millions):~~prohibited transactions involving the following countries: Iran, Sudan, Syria and Cuba, which have been sanctioned by the US.

   For the year ended December 31, 2015
   Provision for
guarantees Provision for
loan
commitments Provisions for
customer
reward
credits Other
provisions Total
Beginning balance
   509,320 90,449 5,548 56,959 662,276
Provisions provided
   19,714 9,801 16,301 51,997 97,813
Provisions used and others
   (25,262 ) 41 (16,404 ) (86,308 ) (127,933 )
Reversal of unused amount
   (160,032 ) (14,976 ) — (43 ) (175,051 )
Others
   20,401 (2 ) — (24 ) 20,375


Ending balance
   364,141 85,313 5,445 22,581 477,480


   For the year ended December 31, 2016
   Provision for
guarantees Provision for
loan
commitments Provisions for
customer
reward
credits Other
provisions Total
Beginning balance
   364,141 85,313 5,445 22,581 477,480
Provisions provided
   4,281 8,502 23,525 8,034 44,342
Provisions used and others
   (80,017 ) 22 (8,158 ) (11,323 ) (99,476 )
Reversal of unused amount
   (64,061 ) (5,409 ) — — (69,470 )
Foreign currencies translation adjustments
   — — — 2,990 2,990
Transfer^(*1)
   — — 503 — 503
Others
   13,773 (519 ) 778 — 14,032


Ending balance
   238,117 87,909 22,093 22,282 370,401


   For the year ended December 31, 2017
   Provision
for
guarantees Provision for
unused
commitments Provisions for
customer
reward credits Other
provisions Total
Beginning balance
   238,117 87,909 22,093 22,282 370,401
Provisions provided
   4,876 2,028 62,593 42,042 111,539
Provisions used and others
   (24,898 ) (68 ) (84,979 ) (8,014 ) (117,959 )
Reversal of unused amount
   (60,300 ) (23,744 ) — (77 ) (84,121 )
Foreign currencies translation adjustments
   9 (10 ) — (249 ) (250 )
Transfer^(*2)
   — — 21,808 — 21,808
Others
   25,443 — 18,930 2,807 47,180


Ending balance
   183,247 66,115 40,445 58,791 348,598


~~(*1)~~2) As
The Group recognized the ~~credits~~provision of the ~~affiliates were transferred~~estimated compensation amount related to the ~~Group,~~miss-selling of the ~~allowance~~Derivative Linked Fund (DLF) incurred during the current term and a fine is expected to be imposed by the Financial Supervisory Service as the best estimate for the ~~provisions for customer reward credits increased, for~~expenditure required to meet its obligations at the ~~year ended December 31, 2016.~~
~~(*2)~~ ~~According to contracts with~~end of the ~~third parties,~~reporting period. The Group estimated such provision will be paid at the request of each counter party, and estimates all amount will be paid within 2020. On the other hand, the actual amount of compensation of the Group ~~ultimately will be reimbursed for which it has paid out on behalf~~may change due to interest rate changes since the end of ~~customers, which has incurred through their customer loyalty programs. Therefore, when such obligation incurs,~~ the ~~Group recognizes it as “transfer”, but there is no impact on the Group’s expense.~~reporting period.
~~(3)~~ ~~Changes in asset retirement obligation are as follows (Unit: Korean Won in millions):~~

   For the year ended
December 31, 2015 For the year ended
December 31, 2016 For the year ended
December 31, 2017
Beginning balance
   29,733 39,121 58,076
Provisions provided
   1,742 2,034 2,225
Provisions used
   (1,316 ) (1,279 ) (1,283 )
Amortization
   394 464 428
Reversal of unused amount
   (179 ) (1 ) (733 )
Increase in restoration costs and others
   8,747 17,737 3,159


Ending balance
   39,121 58,076 61,872


24. NET DEFINED BENEFIT ~~LIABILITY (ASSET)~~LIABILITY(ASSET)
The characteristics of the Group’s defined benefit retirement pension plans ~~characteristics~~ are as follows:
Employees and directors with one or more years of service are entitled to receive a payment upon ~~retirement~~termination of their employment, based on their length of service and rate of ~~pay~~salary at the time of ~~retirement.~~termination. The assets of the plans are measured at their fair value at the end of reporting date. The plan liabilities are measured using the projected unit method, which takes account of projected earnings increases, using actuarial assumptions that give the best estimate of the future cash flows that will arise under the plan liabilities.
The Group is exposed to various risks through defined benefit retirement pension plan, and the most significant risks are as follows:
~~Volatility of Asset~~
The defined benefit obligation was estimated with a discount rate which is calculated based on the yield of blue chip corporate bonds in Korea. A deficit may occur if the rate of return on plan assets falls short of the discount rate. The plan assets include equity instruments and are exposed to the related volatility and risks.
~~Decrease in Yield of Blue Chip Bonds~~
~~A decrease in yield~~
Volatility of asset The defined benefit obligation was estimated with an interest rate calculated based on blue chip corporate bonds earnings. A deficit may occur if the rate of return of plan assets falls short of the interest rate.
Decrease in profitability of blue chip bonds ~~may result in increase in defined benefit liability although the increase in the value of some debt securities in the defined benefit plan would set it off partially.~~
~~Risk of Inflation~~
Defined benefit obligations are correlated to the inflation rate; the higher the inflation rate is, the more the liabilities are recognized mainly due to the fact that inflation rate would result in increase of employee salary growth rate. As a result, a deficit may occur in the plan. However, the plan assets are less impacted since the plan assets consist of mainly debt securities with fixed rates and of equity instruments.
A decrease in profitability of blue chip bonds will be offset by some increase in the value of debt securities that the employee benefit plan owns but will bring an increase in the defined benefit obligation.
Risk of inflation Defined benefit obligations are related to inflation rate; the higher the inflation rate is, the higher the level of liabilities. Therefore, deficit occurs in the system if an inflation rate increases.

(1) ~~The~~
Details of net defined benefit ~~liability(asset) is~~liability are as follows (Unit: Korean Won in millions):

   December 31, 2016 December 31, 2017
Defined benefit obligation
   984,381 1,071,170
Fair value of plan assets
   (990,653 ) (1,027,906 )


Net defined benefit liability(asset)
   (6,272 ) 43,264


~~The details of the net defined benefit liability (asset) per major subsidiaries as of December 31, 2017 is as follows:~~

   Woori Bank
Co, Ltd.    Woori
Card    Woori
FIS    Others    Total
Net Defined Benefit Asset
      1,487          1,487
Net Defined Benefit Liability^(*)
   14,284       28,883    1,584    44,751
   December 31,
2018 December 31,
2019
Present value of defined benefit obligation
   1,275,020 1,442,859
Fair value of plan assets
   (1,101,911 ) (1,352,971 )


Net defined benefit liability(*)
   173,109 89,888


(*) ~~This number~~
Net defined benefit liability of 89,888 million Won at the end of the current term is ~~before adjusting for internal transaction. As most entities other than Woori Bank Co, Ltd, deposit their plan~~the subtracted amount of the net defined benefit asset ~~to Woori Bank, adjusting internal transaction,~~of 2,582 million Won from the ~~Group’s plan asset should be decreased by 43,113~~net defined benefit liability of 92,470 million Won.

(2)
Changes in the carrying value of defined benefit obligation are as follows (Unit: Korean Won in millions):

   For the year ended
December 31, 2015 For the year ended
December 31, 2016 For the year ended
December 31, 2017
Beginning balance
   683,961 901,219 984,381
Current service cost
   132,710 153,660 146,750
Interest expense
   21,377 24,326 26,629
Remeasurements
   97,730 (52,402 ) (20,389 )
Foreign currencies translation adjustments
   (8 ) 80 (279 )
Retirement benefit paid
   (26,516 ) (34,346 ) (55,552 )
Curtailment or settlement
   (8,231 ) (9,536 ) (10,928 )
Others
   196 1,380 558


Ending balance
   901,219 984,381 1,071,170


For the year
ended
December 31,
2017
Beginning balance
984,381
Current service cost
146,750
Interest cost
26,629
Remeasurements
(20,389 )
Foreign currencies translation adjustments
(279 )
Retirement benefit paid
(55,552 )
Curtailment or settlement
(10,928 )
Others
558
Ending balance
1,071,170
   For the year ended
December 31
   2018 2019
Beginning balance
   1,071,170 1,275,020
Subsequent amount from transfer company
   — 93
Current service cost
   144,394 163,369
Interest cost
   32,143 32,693
Remeasurements
Financial assumption
   59,429 32,831

Demographic assumptions
   7,728 49,453

Experience adjustment
   33,697 (33,518 )
Foreign currencies translation adjustments
   (3 ) 179
Retirement benefit paid
   (74,952 ) (79,908 )
Business combination (Note 44)
   — 4,674
Others
   1,414 (2,027 )


Ending balance
   1,275,020 1,442,859


(3)
Changes in the plan assets are as follows (Unit: Korean Won in millions):

   For the year ended December 31
   For the year ended
December 31, 2015 For the year ended
December 31, 2016 For the year ended
December 31, 2017    2017 2018 2019
Beginning balance
   608,370 801,528 990,653    990,653 1,027,906 1,101,911
Subsequent amount from transfer company
   — — 93
Interest income
   21,965 25,038 30,601    30,601 33,825 30,937
Remeasurements
   (5,444 ) (7,304 ) (14,125 )    (14,125 ) (14,783 ) 125
Employer’s contributions
   229,069 226,752 43,114    43,114 128,926 292,095
Retirement benefit paid
   (22,860 ) (33,341 ) (51,877 )    (51,877 ) (71,672 ) (76,304 )
Curtailment or liquidation
   (8,240 ) (9,198 ) (11,052 )
Curtailment or settlement
   (11,052 ) — —
Others
   (21,332 ) (12,822 ) 40,592    40,592 (2,291 ) (2,255 )
Business combination (Note 44)
   — — 6,369




Ending balance
   801,528 990,653 1,027,906    1,027,906 1,101,911 1,352,971




(4)
Plan assets wholly consist of ~~time~~fixed deposits as of December 31, ~~2016~~2018 and ~~2017, respectively.~~2019. Among plan assets, realized returns on plan assets amount to ~~16,521~~16,476 million Won, ~~17,734~~19,042 million Won and ~~16,476~~31,062 million Won for the years ended December 31, ~~2015, 2016~~2017, 2018 and ~~2017,~~2019, respectively. ~~Meanwhile, the contribution expected to be paid in the subsequent accounting year amounts to 125,818 million Won.~~
Meanwhile, the contribution expected to be paid in the next accounting year amounts to 156,396 million Won.
~~(5)~~ The various plans are funded, with the relevant employers being responsible for their management. The Bank is responsible for around 92.4% of the Group’s defined benefit obligation as of December 31, 2017, and expects to make contributions to the plans amounting to 125,818 million Won during the year ended December 31, 2018. The expected contribution is calculated by actuaries based on prudent assessments of the amounts needed to fund the plans in accordance with local regulations.
~~(6)~~(5) ~~The analysis for the maturity, which is not discounted, of the defined benefit obligation of the Bank based on current wages is as following(Unit: Korean Won in millions):~~

   December 31, 2016    December 31, 2017
Less than 1 year
   48,132    53,718
1 year ~ less than 2 years
   60,316    70,962
2 years ~ less than 5 years
   159,238    156,561
5 years ~ less than 10 years
   214,650    258,642
More than 10 years
   436,417    449,738
~~As of December 31, 2017, the estimated average period until the commencement of payment is around 12.7 years.~~
~~(7)~~ Current service cost, net interest ~~expense (income), past service cost,~~income, loss (gain) on the curtailment or settlement and ~~loss (gain) due to~~ remeasurements recognized in the consolidated statements ~~of net income and total~~ comprehensive income are as follows (Unit: Korean Won in millions):

   For the year ended December 31
   For the year ended
December 31, 2015 For the year ended
December 31, 2016 For the year ended
December 31, 2017    2017 2018 2019
Current service cost
   132,710 153,660 146,750    146,750 144,394 163,369
Net interest income
   (588 ) (712 ) (3,972 )
Gain (loss) on the curtailment or settlement
   9 (339 ) 124
Net interest income (expense)
   (3,972 ) (1,682 ) 1,756
Loss on the curtailment or settlement
   124 — —




Cost recognized in net income
   132,131 152,609 142,902    142,902 142,712 165,125
Remeasurements^(*)
   103,174 (45,098 ) (6,264 )


Remeasurements
   (6,264 ) 115,637 48,641




Cost recognized in total comprehensive income
   235,305 107,511 136,638    136,638 258,349 213,766




~~(*)~~ ~~This is an amount before considering the tax effects.~~
~~Recognized retirement benefit service costs~~Retirement benefits related to defined contribution plans recognized as expenses are ~~3,623~~3,946 million Won, ~~3,747~~2,437 million Won and ~~3,946~~3,297 million Won for the years ended December 31, ~~2015, 2016~~2017, 2018 and ~~2017,~~2019, respectively.

~~(8)~~(6)
Key actuarial assumptions used in net defined benefit liability ~~assessment~~measurement are as follows:


December 31, 2015

December 31, 2016

December 31, 2017
   December 31, 2017 December 31, 2018 December 31, 2019
Discount rate
   2.83%    2.85%    3.18%    3.18% 2.69% 2.18~2.50%
Future wage growth rate
   6.35%    6.05%    6.18%    6.18% 6.18% 1.89~6.00%
Mortality rate
   Issued by Korea
Insurance Development
Institute Issued by Korea
Insurance Development
Institute Issued by Korea
Insurance Development
Institute
Retirement rate

Experience rate for
each employment classification

Experience rate for
each employment classification

Experience rate for
each employment classification
   Experience rate for
each employment
classification Experience rate for
each employment
classification Experience rate for
each employment
classification
Mortality rate
   Issued by Korea Insurance Development Institute    Issued by Korea Insurance Development Institute    Issued by Korea Insurance Development Institute
The weighted average maturity of defined benefit liability is a minimum of 6.91 to a maximum 11.85 years.

~~(9)~~(7)
The sensitivity to actuarial assumptions used in the assessment of defined benefit obligation is as follows (Unit: Korean Won in millions):

      Change of defined benefit obligation as of
      December 31, 2016 December 31, 2017       December 31, 2018 December 31, 2019
Discount rate
   Increase by 1% point    (107,203 ) (116,405 )    Increase by 1% point    (116,812 ) (151,104 )
Decrease by 1% point    125,395 137,151 Decrease by 1% point    136,990 178,434
Future wage growth rate
   Increase by 1% point    124,766 136,707    Increase by 1% point    135,767 176,169
Decrease by 1% point    (108,344 ) (117,765 ) Decrease by 1% point    (118,020 ) (152,174 )
25. OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES
Other financial liabilities and other liabilities are as follows (Unit: Korean Won in millions):

   December 31, 2016 December 31, 2017    December 31, 2018 December 31, 2019
Other financial liabilities:

Account payable
   �� 5,626,661 4,692,320
Accounts payable
   5,409,268 6,131,339
Accrued expenses
   2,055,936 2,049,861    2,224,330 2,516,231
Borrowings from trust accounts
   3,329,683 3,271,817    3,747,492 3,277,795
Agency business revenue
   331,159 344,591    396,735 362,820
Foreign exchange payables
   702,968 590,667    539,554 1,153,457
Domestic exchange payables
   8,480,765 1,309,646
Domestic exchange settlement credits
   7,134,966 1,261,928
Lease liabilities
   — 419,045
Other miscellaneous financial liabilities
   1,458,747 1,635,156    1,992,663 2,587,193
Present value discount
   (833 ) (1,597 )    (2,484 ) (3,041 )




Sub-total
   21,985,086 13,892,461    21,442,524 17,706,767




Other liabilities:

Unearned Income
   171,050 180,664
Unearned income
   204,034 224,840
Other miscellaneous liabilities
   128,326 103,317    142,044 195,631




Sub-total
   299,376 283,981    346,078 420,471




Total
   22,284,462 14,176,442    21,788,602 18,127,238




26. DERIVATIVES

(1)
Derivative assets and derivative liabilities are as follows (Unit: Korean Won in millions):

   December 31, 2016    December 31, 2018
      Assets    Liabilities    Nominal
Amount    Assets    Liabilities
   Notional
amount    Fair value
hedge    For
trading    Fair value
hedge    For
trading    For fair
value
hedge    For trading    For cash
flow
hedge    For fair
value
hedge    For trading
Interest rate:

Futures
   54,785    —    —    —    —
Swaps
   118,582,511    139,832    470,057    7,013    509,686    150,710,490    35,503    218,140    665    17,654    266,207
Purchase options
   860,000    —    21,172    —    —    530,000    —    10,461    —    —    —
Written options
   1,035,000    —    —    —    21,863    525,000    —    —    —    —    12,438
Currency:

Futures
   493,733    —    —    —    —    320,213    —    —    —    —    —
Forwards
   62,539,094    —    1,265,852    —    1,015,380    88,376,776    —    843,621    —    —    777,039
Swaps
   39,782,049    —    1,022,969    —    1,221,959    67,179,195    —    761,907    33,089    —    773,701
Purchase options
   1,120,949    —    42,126    —    —    1,933,454    —    17,544    —    —    —
Written options
   907,211    —    —    —    8,589    3,134,774    —    —    —    —    20,747
Equity:

Futures
   926,392    —    —    —    —    186,737    —    —    —    —    —
Swaps
   15,000    —    92    —    88    441,573    —    31,377    —    —    1,217
Purchase options
   3,007,969    745    73,261    —    —    4,925,315    —    143,029    —    —    —
Written options
   4,460,233    —    —    208    228,900    6,145,935    —    —    —    —    239,512
Others:

Futures
   5,105    —    —    —    —
Swaps
   7,918    —    2,645    —    2,331
Purchase options
   8,307    —    121    —    —
Written options
   64,352    —    —    —    1,181






















Total
   233,870,608    140,577    2,898,295    7,221    3,009,977    324,409,462    35,503    2,026,079    33,754    17,654    2,090,861






















   December 31, 2017    December 31, 2019
      Assets    Liabilities       Assets    Liabilities
   Nominal
amount    For cash
flow
hedge    For fair
value
hedge    For
trading    For cash
flow
hedge    For fair
value
hedge    For
trading    Nominal
amount    For cash
flow
hedge    For fair
value
hedge    For
trading    For cash
flow
hedge    For fair
value
hedge    For trading
Interest rate:

Futures
   75,845        —    —    —    —    —    —    124,737    —    —    —    —    —    —
Swaps
   130,197,378    —    59,272    223,935    —    12,103    253,972    150,731,987    —    111,764    300,750    1,323    —    413,195
Purchase options
   630,000    —    —    12,346    —    —    —    460,000    —    —    11,888    —    —    —
Written options
   795,000    —    —    —    —    —    12,869    395,789    —    —    —    —    —    9,655
Currency:

Futures
   318,217    —    —    —    —    —    —    1,934    —    —    —    —    —    —
Forwards
   72,526,956    —    —    1,314,369    —    —    1,375,799    113,988,295    —    —    1,447,811    321    —    1,030,246
Swaps
   48,176,306    —    —    1,352,924    55,651    —    1,347,905    82,125,050    9,367    —    966,181    5,193    —    1,106,423
Purchase options
   2,291,154    —    —    64,267    —    —    —    1,588,746    —    —    18,835    —    —    —
Written options
   4,038,237    —    —    —    —    —    58,687    2,341,179    —    —    —    —    —    9,403
Equity:

Futures
   91,436    —    —    —    —    —    —    630,562    —    —    —    —    —    —
Swaps
   15,000    —    —    103    —    —    10
Purchase options
   5,060,706    —    —    146,775    —    —    —
Written options
   4,504,290    —    —    —    —    —    99,770
Others:

Futures
   —    —    —    —    —    —    —
Forwards
   11    —    —    —    —    —    —
Swaps
   7,805    —    —    1,056    —    —    1,037    1,280,436    —    —    1,217    —    —    54,393
Purchase options
   —    —    —    —    —    —    —    8,851,984    —    —    175,221    —    —    —
Written options
   5,000    —    —    —    —    —    100    8,978,953    —    —    —    —    —    219,831




























Total
   268,733,330    —    59,272    3,115,775    55,651    12,103    3,150,149    371,499,663    9,367    111,764    2,921,903    6,837    —    2,843,146




























Derivatives held for trading ~~purpose~~ are classified into financial assets orat FVTPL (Note 7) and financial liabilities at FVTPL ~~(see Notes 7~~(Note 20), and ~~20) and~~ derivatives designated for hedging are ~~stated~~presented as a separate line item in the consolidated statements of financial position.

(2) ~~Gains or losses from valuation~~
Overview of ~~financial~~the Group’s hedge accounting
The hedging relationships the entity applies fair value hedge accounting and cash flow hedge accounting to are affected by interest rate which is related with Interest Rate Benchmark Reform. The interest rates to which the hedging relationships are exposed are USD 1M LIBOR, USD 3M LIBOR, USD 6M LIBOR, and 3M EURIBOR. The nominal amounts of hedging instruments related to 1M LIBOR, 3M LIBOR, 6M LIBOR and 3M EURIBOR are USD 400,000,000, USD 2,230,000,000, USD 500,000,000, and EUR 26,635,556, respectively. The entity pays close attention to discussions in the market and industry regarding the applicable alternative benchmark interest rates for the exposed interest rate. The entity judges related uncertainty is expected to be no longer present when the exposed interest rates are replaced by the applicable benchmark interest rates.
1) Fair value hedge
As of the current period end, the Group has applied fair value hedge on fixed interest rate foreign currency denominated debentures amounting to 3,151,172 million Won. The purpose of the hedging is to avoid fair value volatility risk of fixed interest rate foreign currency denominated debentures derived from fluctuations of market interest rate, and as such the Group entered into interest rate swap agreements designated as hedging instruments.
Pursuant to the interest rate swap agreement, by swapping the calculated difference between the fixed interest rate and floating interest rate applied to the nominal value, the fair value fluctuation risk is hedged as the foreign currency denominated debentures fixed interest rate terms are converted to floating interest rate. Pursuant to the interest rate swap agreement, hedge ratio is determined by matching the nominal value of hedged instrument to the face value of the hedged item.
In this hedging relationship, only the market interest rate fluctuation, which is the most significant part of the fair value change of the hedged item, is designated as the hedged risk, and other risk factors including credit risk are not included in the hedged risk. Therefore, the ineffective portion of the hedge could arise from fluctuations in the timing of the cash flow of the hedged item, the change in the total amount and price of the hedged item, or significant credit risk fluctuation of either party of the hedging instrument.
The interest rate swap agreements and the hedged items are subject to fluctuations in the underlying market rate of interest and the Group expects the fair value of the interest rate swap contract and the value of the hedged item to generally change in the opposite direction.
The fair value of the interest rate swap at the end of the reporting period is determined by discounting future cash flows estimated by using the yield curve at the end of the reporting period and the credit risk embedded in the contract and the average interest rate is determined based on the outstanding balance at the end of the reporting period. The variable interest rate applied to the interest rate swap is USD Libor 3M (6M) plus spread. In accordance with the terms of each interest rate swap contract designated as a hedging instrument, the Group receives interest at a fixed interest rate and pays interest at a variable interest rate.
2) Cash Flow Hedge
As of the December, 31 2019, the Group has applied cash flow hedge on local currency denominated debentures amounting to 99,941 million Won, debentures on foreign currency amounting to 729,141 million Won and Borrowings in foreign currency amounting to 34,443million Won. The Group’s hedging strategies are to 1) Mitigate risks of cash flow fluctuation from variable interest rate debentures on local currency due to changes in market interest rate by entering into an interest rate swap contract and thereby designating it as hedging instrument; 2) Mitigate the risks of cash flow fluctuation from principal and interest of variable-interest rate debentures denominated in foreign currency due to changes in foreign exchange rates and interest rates by entering into a currency swap contract and thereby designating it as hedging instrument; 3) Mitigate the risks of cash flow fluctuation from principal and interest of fixed-interest rate debentures denominated in foreign currency due to changes in foreign exchange rates by entering into a currency swap contract and thereby designating it as hedging instrument and 4) Mitigate the risks of cash flow fluctuation in variable-interest rate foreign currency borrowings resulting from changes in market interest rates and designate it as a hedging instrument through entering into currency swap contracts and interest rate swap contracts.
This means exchanging a predetermined nominal amount as set forth in the interest rate swap contract adjusted by the differences between the fixed and variable interest rates, which results in the conversion of interest rates of debentures in local currency and borrowings in foreign currency from variable interest into fixed interest, eliminating the cash flow fluctuation risk.
In addition, this also means a payment of predetermined principal amount as set forth in the currency swap adjusted by fixed interest rate, an exchange of an amount calculated by applying variable interest rate to USD or applying fixed interest rate to SGD, and an exchange of the principal denominated in KRW and principal denominated in foreign currency at maturity eliminating cash flow fluctuation risk on principal and interest.
The hedge ratio is determined by matching the nominal amount of the hedging instrument to the face amount of the hedged item in accordance with interest rate swap and currency swap.
Only interest rate and foreign exchange rate fluctuation risk, which is the most significant factor in the cash flow fluctuation of the hedged item, is addressed in this hedging relationship, and other risk factors such as credit risk are not subject to hedging.
Thus, there could be hedge ineffectiveness arising from price margin set by the counterparty of hedging instruments and unilateral change in credit risk of any party in the transaction.
The interest rate swap, currency swap contract and the hedged item are all affected by the changes in market interest rate and foreign exchange rates which are basic factors of the derivative. The Group expects that the value of interest rate swap contract, currency swap contract and the hedged item will generally fluctuate in opposite direction.
(3)
The nominal amounts of the hedging instrument are as follows (Unit: USD, EUR, SGD, JPY and Korean Won in millions):
   December 31, 2018
   1 year or less    1 year to 5
years    More than 5
years    Total
Fair value hedge

Interest rate risk

Interest rate swap (USD)
   —    1,350,000,000    1,300,000,000    2,650,000,000
Cash flow hedge

Interest rate risk

Interest rate swap (KRW)
   —    100,000    —    100,000
Foreign currencies translation risk and interest rate risk

Currency swap (USD)
   50,000,000    450,000,000    —    500,000,000
Foreign currencies translation risk

Currency swap (SGD)
   —    204,000,000    —    204,000,000
   December 31, 2019
   1 year or less    1 year to 5
years    More than 5
years    Total
Fair value hedge

Interest rate risk

Interest rate swap (USD)
   350,000,000    2,000,000,000    300,000,000    2,650,000,000
Cash flow hedge

Interest rate risk

Interest rate swap (EUR)
   —    26,635,556    —    26,635,556
Interest rate swap (KRW)
   —    100,000    —    100,000
Foreign currencies translation risk and interest rate risk

Currency swap(USD)
   150,000,000    330,000,000    —    480,000,000
Foreign currencies translation risk

Currency swap (SGD)
   136,000,000    68,000,000    —    204,000,000
Currency forward (JPY)
   49,325,155    1,059,903,932    —    1,109,229,087
(4)
The average interest rate and average currency rate of the hedging instrument as of December 31, 2018 and December 31, 2019 are as follows:
December 31, 2018
Average interest rate and average exchange rate
Fair value hedge
Interest rate risk
Interest rate swaps (USD)
Fixed 3.96% receipt and Libor 3M+1.61% floating paid
Fixed 5.88% receipt and Libor 6M+2.15% floating paid
Cash flow hedge
Interest rate risk
Interest rate swap (KRW)
CMS 3Y+0.40% receipt, 2.38% paid
Foreign currencies translation risk and interest rate risk
Currency swap (USD)
USD 3M Libor+0.70% receipt, KRW 1.74% paid, KRW/USD = 1,136
USD 1M Libor+0.52% receipt, KRW 1.70% paid, KRW/USD = 1,178
Foreign currencies translation risk
Currency swap (SGD)
SGD 1.91% receipt, KRW 1.98% paid, KRW/SGD = 828
December 31, 2019
Average interest rate and average exchange rate
Fair value hedge
Interest rate risk
Interest rate swap (USD)
Fixed 3.96% receipt and Libor 3M+1.61% floating paid
Fixed 5.88% receipt and Libor 6M+2.15% floating paid
Cash flow hedge
Interest rate risk
Interest rate swap (EUR)
3M EURIBOR receipt, EUR 0.09% paid
Interest rate swap (KRW)
CMS 3Y+0.40% receipt, 2.38% paid
Foreign currencies translation risk and interest rate risk
Currency swap (USD)
USD 3M Libor+0.80% receipt, KRW 1.45% paid, KRW/USD = 1,155
USD 1M Libor+0.54% receipt, KRW 1.53% paid, KRW/USD = 1,158
Foreign currencies translation risk
Currency swap (SGD)
SGD 1.91% receipt, KRW 1.98% paid, KRW/SGD = 828
Currency forward (JPY)
KRW/JPY = 10.47
(5)
The amounts related to items designated as hedging instruments ~~under~~are as follows (Unit: Korean Won in millions, USD, EUR, SGD and JPY):
   December 31, 2018
   Nominal amounts of
the hedging
instrument    Carrying amounts of the
hedging instrument
Line item in the
statement of financial
position where the
hedging instrument is
located
   Changing in fair
value used for
calculating hedge
ineffectiveness
   Assets    Liabilities
Fair value hedge

Interest rate risk

Interest rate swap
   USD 2,650,000,000    35,503    17,654
Derivative assets
(Designated for hedging)
Derivative liabilities
(Designated for hedging)
   (27,362 )
Cash flow hedge

Interest rate risk

Interest rate swap
   KRW 100,000    —    665
Derivative liabilities
(Designated for hedging)
   (665 )
Foreign currencies translation risk and interest rate risk

Currency swap
   USD 500,000,000    —    28,907
Derivative liabilities
(Designated for hedging)
   21,582
Foreign currencies translation risk

Currency swap
   SGD 204,000,000    —    4,182
Derivative liabilities
(Designated for hedging)
   2,353
   December 31, 2019
   Nominal amounts of
the hedging
instrument    Carrying amounts of the
hedging instrument
Line item in the
statement of financial
position where the
hedging instrument is
located
   Changing in fair
value used for
calculating hedge
ineffectiveness
   Assets    Liabilities
Fair value hedge

Interest rate risk

Interest rate swap
   USD 2,650,000,000    111,764    —
Derivative assets
(designated for hedging)
   90,244
Cash flow hedge

Interest rate risk

Interest rate swap
   EUR 26,635,556    —    43
Derivative liabilities
(designated for hedging)
   (43 )
Interest rate swap
   KRW 100,000    —    1,280
Derivative liabilities
(designated for hedging)
   (615 )
Foreign currency translation risk and interest rate risk

Currency swap
   USD 480,000,000    4,070    5,193
Derivative assets
(designated for hedging)
Derivative liabilities
(designated for hedging)
   22,364
Foreign currency translation risk

Currency swap
   SGD 204,000,000    5,297    —
Derivative assets
(designated for hedging)
   8,918
Currency forward
   JPY 1,109,229,087    —    321
Derivative liabilities
(designated for hedging)
   321
(6)
Details of carrying amount to hedge and amount due to hedge accounting are as follows (Unit: Korean Won in millions):

   For the year ended
December 31, 2015 For the year ended
December 31, 2016 For the year ended
December 31, 2017
Gains or losses from hedged items
   (31,297 ) 98,827 110,152
Gains or losses from hedging instruments
   38,021 (98,851 ) (109,447 )
December 31, 2018
Carrying amounts of the
hedging item Accumulated amount of fair
value hedge adjustments on
the hedged item included in
the carrying amount of the
hedged item Line item in the
statement of
financial position
in which the
hedged item is
included Changing in
fair��value used
for calculating
hedge
ineffectiveness Cash flow
hedge
reserve^(*)
Assets Liabilities Assets Liabilities
Fair value hedge

Interest rate risk

Debentures
— 2,956,565 — 5,200 Debentures 25,498 —
Cash flow hedge

Interest rate risk

Debentures
— 99,911 — — Debentures 521 (371 )
Foreign currencies translation risk and interest rate risk

Debentures
— 557,186 — — Debentures (16,790 ) (1,211 )
Foreign currencies translation risk

Debentures
— 166,122 — — Debentures (1,762 ) (2,287 )
~~The maximum period that the Group is exposed to cash flow risk arising from the hedging transaction discussed above will be terminated by February 2021.~~
(*)
After tax amount
Among gain (loss) on valuation of derivatives that was included in the accumulated other comprehensive income, 56,676 million Won has been reclassified to loss, before reduction of income tax effect for the year ended December 31, 2017.
December 31, 2019
Carrying amounts of the
hedging item Accumulated amount of fair
value hedge adjustments on
the hedged item included in
the carrying amount of the
hedged item Line item in the
statement of
financial position
in which the
hedged item is
included Changing in
fair value used
for calculating
hedge
ineffectiveness Cash flow
hedge
reserve^(*)
Assets Liabilities Assets Liabilities
Fair value hedge

Interest rate risk

Debentures
— 3,151,172 — 91,368 Debentures (85,984 ) —
Cash flow hedge

Interest rate risk

Borrowings in foreign currency
— 34,443 — —

Borrowing
foreign
currency

43 (43 )
Debentures
— 99,941 — — Debentures 663 (821 )
Foreign currencies translation risk and interest rate risk

Debentures
— 554,433 — — Debentures (25,057 ) (2,525 )
Foreign currencies translation risk

Debentures
— 174,708 — — Debentures (8,315 ) (2,304 )
(*) After tax amount
(7)
Amounts recognized in profit or loss due to the ineffective portion of fair value hedges during the current period are as follows (Unit: Korean Won in millions):
For the year ended December 31, 2018
Hedge ineffectiveness
recognized in profit or loss
Line item in the profit or loss that includes
hedge ineffectiveness
Fair value hedge
Interest rate risk
(1,864 ) Other net operating income(expense)
For the year ended December 31, 2019
Hedge ineffectiveness
recognized in profit or loss
Line item in the profit or loss that includes
hedge ineffectiveness
Fair value hedge
Interest rate risk
4,260 Other net operating income(expense)
(8)
Reclassification of profit or loss from other comprehensive income and equity related to cash flow hedges are as follows (Unit: Korean Won in millions):
      For the year ended December 31, 2018
      Changes in
the value of
hedging
instruments
recognized
in cash flow
hedge
reserve Hedge
ineffectiveness
recognized in
profit or loss Changes
in the
value of
foreign
basis
spread
recognized
in OCI Line item in
the profit or
loss that
includes
hedge
ineffectiveness    Amounts
reclassified
from cash
flow hedge
reserve to
profit or
loss Line item
affected in
profit or loss
due to
reclassification
Cash flow hedge

Interest rate risk
   (517 ) (148 ) — Other net
operating
income
(expense)    — Other net
operating
income
(expense)

Foreign currencies translation risk and interest rate risk
   21,429 153 (882 ) Other net
operating
income
(expense)    (23,084 ) Other net
operating
income
(expense)

Foreign currencies translation risk
   2,353 — (491 ) Other net
operating
income
(expense)    (3,601 ) Other net
operating
income
(expense)
      For the year ended December 31, 2019
      Changes in
the value of
hedging
instruments
recognized
in cash flow
hedge
reserve Hedge
ineffectiveness
recognized in
profit or loss    Changes
in the
value of
foreign
basis
spread
recognized
in OCI    Line item in
the profit or
loss that
includes
hedge
ineffectiveness    Amounts
reclassified
from cash
flow hedge
reserve to
profit or
loss Line item
affected in
profit or loss
due to
reclassification
Cash flow hedge

Interest rate risk
   (658 ) —    —    Other net
operating
income
(expense)    — Other net
operating
income
(expense)

Foreign currencies translation risk and interest rate risk
   21,420 944    838    Other net
operating
income
(expense)    (23,541 ) Other net
operating
income
(expense)

Foreign currencies translation risk
   7,638 1,601    560    Other net
operating
income
(expense)    (8,215 ) Other net
operating
income
(expense)
27. DEFERRED DAY 1 ~~PROFIT~~PROFITS OR ~~LOSS~~LOSSES
Changes in ~~details of~~ deferred day 1 profits or losses are as follows (Unit: Korean Won in millions):

   For the years ended
December 31
   For the year ended
December 31, 2015 For the year ended
December 31, 2016 For the year ended
December 31, 2017    2017 2018 2019
Beginning balance
   13,499 28,008 13,422    13,422 7,416 25,463
Acquisitions
   26,762 1,337 500
Amounts recognized in profits or losses
   (12,253 ) (15,923 ) (6,506 )
New transactions
   500 23,678 53,289
Amounts recognized in losses
   (6,506 ) (5,631 ) (26,493 )




Ending balance
   28,008 13,422 7,416    7,416 25,463 52,259




In case some variables to measure fair values of financial instruments ~~were~~are not observable ~~or available~~ in the market, valuation techniques ~~were~~are utilized to evaluate such financial instruments. Those financial instruments ~~were~~are recorded at the ~~fair value produced by the valuation techniques~~transaction price as at the time of acquisition, even though there ~~were~~are difference noted between the transaction price and the fair value. The table above presents the difference yet to be realized as profit or losses.
~~28. CAPITAL STOCK AND CAPITAL SURPLUS~~
28.
EQUITY

(1)
Details of equity as of December 31, 2018 and 2019 are as follows (Unit: Korean Won in millions):
   December 31, 2018 December 31, 2019
Capital

Common stock capital
   3,381,392 3,611,338
Hybrid securities^(*1)
   3,161,963 997,544
Capital surplus

Paid in capital in excess of par^(*2)
   269,533 608,348
Equity method
   — 1,153
Others
   16,356 16,794


Sub-total
   285,889 626,295


Capital adjustments

Treasury stocks
   (34,113 ) —
Other adjustments^(*3)
   (1,607,647 ) (1,748,667 )


Sub-total
   (1,641,760 ) (1,748,667 )


Accumulated other comprehensive income

Financial assets at FVTOCI
   (87,182 ) (71,914 )
Gain on evaluation of investment stocks by equity method
   302 915
Loss from foreign business translation
   (244,735 ) (152,987 )
Remeasurements of defined benefit plan
   (236,726 ) (270,977 )
Loss on evaluation of cash flow hedge
   (3,869 ) (5,692 )


Sub-total
   (572,210 ) (500,655 )


Retained earnings^(*4)^(*5)
   17,124,657 18,524,515
Non-controlling interest^{(*1) (*6)}
   213,113 3,981,962


Total
   21,953,044 25,492,332


(*1)
At the end of the previous term, hybrid securities were issued by Woori Bank, a subsidiary company, and were classified asnon-controlling interests of capital from the 11th of January, 2019.
(*2)
Capital surplus increased as new shares were issued through a comprehensive stock exchange of shares when Woori Financial Inc. was established. (Note 1)
(*3)
Included capital transaction gains and losses recognized by the 2014 merger of Woori Bank and (formerly) Woori Financial Group Inc. During the current term, the Group entered to acquire and additional interest in the Woori Asset Trust Co., Ltd., reducing the capital adjustment by 111,242 million Won.
(*4)
The earned surplus reserve in retained earnings amounted to 1,857,754 million Won and 2,039,754 million Won as of December 31, 2018 and 2019, respectively. The earned surplus reserve is appropriated at least one tenth of the earnings after tax on every dividend declaration, not exceeding the paid in capital. The reserve is restricted for the payment of cash dividends but be used for offsetting a deficit or transferring to capital in accordance with the Act.
(*5)
The regulatory reserve for credit loss in retained earnings amounted to 2,578,457 million and 2,356,246 million Won as of December 31, 2018 and 2019, respectively. The reserve is restricted for the payment of cash dividends pursuant to regulations.
(*6)
69,533 million Won increased as of December 31, 2019 due to business combination of Woori Asset Management Corp., and Woori Asset Trust Co., Ltd. (Note 44)
(2)
The number of authorized shares and others of the Group are as follows:

   December 31, ~~2016~~2018    December 31, ~~2017~~2019
~~Authorized shares~~Shares of common stock authorized
   5,000,000,000 Shares    ~~5,000,000,000~~4,000,000,000 Shares
Par value
   5,000 Won    5,000 Won
~~Issued shares~~Shares of common stock issued
   676,000,000 Shares    ~~676,000,000~~722,267,683 Shares
Capital stock
   3,381,392 million Won    ~~3,381,392~~3,611,338 million Won

~~(2)~~(3) ~~Changes~~
There are no changes in ~~numbers~~the number of shares issued and outstanding for the years ended December 31, 2017 and 2018. Details of changes in shares of ~~common stock~~the Group issued as of December 31, 2019 are as ~~follows (Unit: Shares):~~follows:

   December 31, 2015 December 31, 2016    December 31, 2017
Beginning balance
   676,278,371 676,000,000    676,000,000
Retirement of treasury stock
   (278,371 ) —    —




Ending balance
   676,000,000 676,000,000    676,000,000




December 31, 2019
Date of incorporation^(*1)
680,164,306
Increase^(*2)
42,103,377
Decrease
—
Ending Balance
722,267,683

~~(3)~~(*1) ~~Details~~
The number of ~~capital surplus are~~shares issued by Woori Bank at the end of the business combination period is 676,000,000. When Woori Financial Group Inc. was established, 4,164,306 shares were issued as ~~follows (Unit: Korean Won~~a result of stock comprehensive exchange with Woori Bank which is a shareholder of Woori FIS Co., Ltd., Woori Finance Management Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Private Equity Asset Management Co., Ltd., and Woori Fund Service Co., Ltd.
(*2)
New stocks were issued for the comprehensive stock exchange which was to transfer Woori Card Co., Ltd., as a first level of subsidiary from second-tier subsidiary in ~~millions):~~September, 2019.

   December 31, 2016    December 31, 2017
Capital in excess of par value
   269,533    269,533
Other capital surplus
   16,798    16,347




Total
   286,331    285,880




~~29. HYBRID SECURITIES~~
(4)
Hybrid securities
The bond-type hybrid securities classified as owner’s equity are as follows (Unit: Korean Won in millions):


Issue date

Maturity
   Interest
rate (%)    December 31,
2016 December 31,
2017 Issue date Maturity Interest
rate (%) December 31,
2018 December 31,
2019
Securities in local currency
   June 20, 2008    June 20, 2038    7.7    255,000 255,000
Securities in local currencies
April 25, 2013 April 25, 2043 4.4 500,000 —
November 13, 2013 November 13, 2043 5.7 200,000 —
   March 8, 2012    March 8, 2042    5.8    190,000 — December 12, 2014 December 12, 2044 5.2 160,000 —
   April 25, 2013    April 25, 2043    4.4    500,000 500,000 June 3, 2015 June 3, 2045 4.4 240,000 —
   November 13, 2013    November 13, 2043    5.7    200,000 200,000 July 26, 2018 — 4.4 400,000 —
   December 12, 2014    December 12, 2044    5.2    160,000 160,000 July 18, 2019 — 3.49 — 500,000
   June 3, 2015    June 3, 2045    4.4    240,000 240,000 October 11, 2019 — 3.32 — 500,000
Securities in foreign currencies
   May 2, 2007    May 2, 2037    6.2    930,900 — June 10, 2015 June 10, 2045 5.0 559,650 —
   June 10, 2015    June 10, 2045    5.0    559,650 559,650
September 27,
2016
— 4.5 553,450 —
   September 27, 2016    —    4.5    553,450 553,450 May 16, 2017 — 5.3 562,700 —
   May 16, 2017    —    5.3    — 562,700
Issuance cost
            (14,104 ) (12,912 ) (13,837 ) (2,456 )


Total
            3,574,896 3,017,888 3,161,963 997,544


The hybrid securities mentioned above ~~are either without a~~do not have maturity date ~~or its maturity can be extended indefinitely at the maturity date without change of terms. Further, if a resolution is passed not to pay dividends on common stock, interest payments on~~but are redeemable after 5 years.
In addition, the hybrid securities ~~may be skipped.~~issued by the Bank have been reclassified tonon-controlling interests in the consolidated financial statements of the Group in 2019 due to the establishment of the financial holding company on January 11, 2019.
~~30. OTHER EQUITY~~
~~(1)~~(5)
Details of ~~other equity~~changes in capital adjustments are as follows (Unit: Korean Won in millions):

   December 31,
2016 December 31,
2017
Other comprehensive income:

Gain on valuation of AFS financial assets
   386,981 301,930
Share of other comprehensive loss of joint ventures and associates
   (1,863 ) (1,251 )
Loss on foreign currencies translation
for foreign operations
   (48,353 ) (242,700 )
Remeasurement of the net defined benefit liability
   (163,397 ) (152,624 )
Gain on valuation of cash flow hedges
   — 777
Equity related to current assets held for sale
   — 4,145


Sub-total
   173,368 (89,723 )


Treasury shares
   (34,113 ) (34,113 )
Other capital adjustments
   (1,607,280 ) (1,815,438 )


Total
   (1,468,025 ) (1,939,274 )


~~(2)~~ ~~Changes in the accumulated other comprehensive income are as follows (Unit: Korean Won in millions):~~

   For the year ended December 31, 2015
   Beginning
balance Increase
(decrease) on
valuation Reclassification^(*) Income tax
effect Ending
balance
Gain (loss) on valuation ofavailable-for-sale financial assets
   300,994 190,842 (101,439 ) (15,712 ) 374,685
Share of other comprehensive income (loss) of joint ventures and associates
   2,779 4,409 — (1,114 ) 6,074
Gain (loss) on foreign currency translation of foreign operations
   (107,721 ) 49,421 — (12,489 ) (70,789 )
Remeasurement of the net defined benefit liability
   (119,375 ) (102,467 ) — 24,263 (197,579 )
Loss on valuation of cash flow hedges
   (10,371 ) — — — (10,371 )


Total
   66,306 142,205 (101,439 ) (5,052 ) 102,020


   For the year ended December 31, 2016
   Beginning
balance Increase
(decrease) on
valuation Reclassification^(*) Income tax
effect Ending
balance
Gain (loss) on valuation ofavailable-for-sale financial assets
   374,685 114,617 (101,647 ) (674 ) 386,981
Share of other comprehensive income (loss) of joint ventures and associates
   6,074 (9,274 ) — 1,337 (1,863 )
Gain (loss) on foreign currency translation of foreign operations
   (70,789 ) 30,368 — (7,932 ) (48,353 )
Remeasurement of the net defined benefit liability
   (197,579 ) 45,096 — (10,914 ) (163,397 )
Gain (loss) on valuation of cash flow hedges
   (10,371 ) 10,371 — — —


Total
   102,020 191,178 (101,647 ) (18,183 ) 173,368


   For the year ended December 31, 2017
   Beginning
balance Increase
(decrease) on
valuation Reclassification^(*) Income tax
effect Ending
balance
Gain (loss) on valuation ofavailable-for-sale financial assets
   386,981 80,997 (164,803 ) (1,245 ) 301,930
Share of other comprehensive income (loss) of joint ventures and associates
   (1,863 ) 2,516 — (1,904 ) (1,251 )
Loss on foreign currency translation of foreign operations
   (48,353 ) (193,272 ) — (1,075 ) (242,700 )
Remeasurement gain (loss) related to defined benefit plan
   (163,397 ) 6,216 — 4,557 (152,624 )
Gain (loss) on valuation of cash flow hedges
   — 1,025 — (248 ) 777
Transfer tonon-current assets held for sale
   — 4,145 — — 4,145


Total
   173,368 (98,373 ) (164,803 ) 85 (89,723 )


   December 31,
2018 December 31,
2019
Beginning balance
   (1,849,551 ) (1,641,760 )
Losses on redemption of hybrid securities
   (368 ) (277 )
Acquisition of treasury stocks
   — 4,245
Transaction with other owners^(*)
   208,159 (110,875 )


Ending balance
   (1,641,760 ) (1,748,667 )


(*)
111,242 million Won is included which has been reduced by the Group to obtain an additional stake in the Woori Asset Trust Co., Ltd.
(6)
Accumulated other comprehensive income
Changes in the accumulated other comprehensive income are as follows (Unit: Korean Won in millions):
   For the year ended December 31, 2017
   Beginning
balance Increase
(decrease)^(*) Reclassification
adjustments^(*) Income tax
effect Ending
balance
Gain (loss) on valuation of AFS financial assets
   386,981 80,997 (164,803 ) (1,245 ) 301,930
Share of other comprehensive income (loss) of joint ventures and associates
   (1,863 ) 2,516 — (1,904 ) (1,251 )
Loss on foreign currency translation of foreign operations
   (48,353 ) (193,272 ) — (1,075 ) (242,700 )
Remeasurement gain (loss) related to defined benefit plan
   (163,397 ) 6,216 — 4,557 (152,624 )
Gain (loss) on valuation of cash flow hedges
   — 1,025 — (248 ) 777
Transfer to assets held for sale
   — 4,145 — — 4,145


Total
   173,368 (98,373 ) (164,803 ) 85 (89,723 )


(*)
For the change in gain (loss) on valuation of AFS financial assets, ~~“reclassification” is~~“increase (decrease)” represents change due to the valuation during the period, and “reclassification adjustments” represents disposal or recognition of impairment losses on AFS financial assets.
   For the year ended December 31, 2018
   Beginning
balance Increase
(decrease)^(*1)(*2) Reclassification
adjustments Income tax
effect Ending
balance
Net gain (loss) on valuation of financial assets at FVTOCI
   (88,906 ) (8,677 ) 8,015 2,386 (87,182 )
Gain (loss) on financial liabilities at FVTPL designated as upon initial recognition due to own credit risk
   (96 ) 132 — (36 ) —
Share of other comprehensive gain (loss) of joint ventures and associates
   (2,656 ) 4,080 — (1,122 ) 302
Gain (loss) on foreign currency translation of foreign operations
   (242,806 ) (2,661 ) — 732 (244,735 )
Remeasurement gain (loss) related to defined benefit plan
   (152,358 ) (111,401 ) — 27,033 (236,726 )
Gain (loss) on valuation of derivatives designated as cash flow hedges
   777 30,655 (26,871 ) (8,430 ) (3,869 )
Transfer to assets held for distribution (sale)
   4,145 (4,145 ) — — —


Total
   (481,900 ) (92,017 ) (18,856 ) 20,563 (572,210 )


~~31. RETAINED EARNINGS~~
(*1)
Net gain (loss) on valuation of financial assets at FVTOCI included the 1,009 million Won transfer to retained earnings due to disposal of equity securities.
(*2)
Gain (loss) on financial liabilities at fair value through profit or loss designated as upon initial recognition due to credit risk included the 4 million Won transferred to retained earnings due to redemption.
   For the year ended December 31, 2019
   Beginning
balance Increase
(decrease)^(*) Reclassification
adjustments    Income tax
effect Ending
balance
Net gain (loss) on valuation of financial assets at FVTOCI
   (87,182 ) (24,180 ) 43,021    (3,573 ) (71,914 )
Share of other comprehensive gain (loss) of joint ventures and associates
   302 (1,420 ) —    2,033 915
Gain (loss) on foreign currency translation of foreign operations
   (244,735 ) 96,157 —    (4,409 ) (152,987 )
Remeasurement gain (loss) related to defined benefit plan
   (236,726 ) (48,244 ) —    13,993 (270,977 )
Gain (loss) on valuation of derivatives designated as cash flow hedges
   (3,869 ) (32,719 ) 31,756    (860 ) (5,692 )




Total
   (572,210 ) (10,406 ) 74,777    7,184 (500,655 )




(*)
The increase and decrease of financial asset valuation profit or loss at fair value through other comprehensive income is a change due to the period evaluation and includes the amount of 29,368 million Won replaced by retained earnings due to the disposal of the equity securities.
(7)
Treasury stock
Details of treasury stocks are as follows (Unit: Shares, Korean Won in millions):
   December 31, 2019
   Number of
shares Book
value
Beginning balance
   2,728,774 34,113
Acquisition(*)
   57,721,387 799,886
Disposal
   (60,450,159 ) (833,999 )


Ending balance
   2 —


(*)
At the establishment of Woori Financial Group Inc., Woori Bank acquired 15,618,008 shares of the Group. (The comprehensive stock transfer of Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Woori Fund Services Co., Woori Private Equity Asset Management Co. and the parent company, Woori Financial Group Inc. :4,164,306 shares, execution of the right to purchase shares from shareholders who were against to comprehensive stock transfer: 11,453,702 shares) In September 2019, Woori Bank acquired 42,103,377 additional shares of Woori Financial Group Inc. through a comprehensive exchange of shares of Woori Card Co., Ltd. and Woori Financial Group Inc., the parent company. 2 shares of treasury stocks have been incurred for the provision forodd-lot payment incurred during the partial stock replacement of the shareholders who possess physical stock certificate.
29. DIVIDENDS
Dividends for the years 2018 and 2019 are 650 Won and 700 Won, respectively, and the total amount of dividends paid are 437,626 million Won and 505,587million Won, respectively. The dividends for the current period were approved on March 25, 2020.
30. NET INTEREST INCOME

(1)
Details of ~~retained earnings~~interest income recognized are as follows (Unit: Korean Won in millions):

      December 31,
2016    December 31,
2017
Legal reserve
   Earned surplus reserve    1,622,754    1,729,754
   Other legal reserve    44,634    45,668





Sub-total
   1,667,388    1,775,422




Voluntary reserve
   Business rationalisation reserve    8,000    8,000
   Reserve for financial structure improvement    235,400    235,400
   Additional reserve    7,073,104    7,418,806
   Regulatory reserve for credit loss    2,255,252    2,438,191
   Revaluation reserve    753,908    751,964
   Other voluntary reserve    11,700    11,700





Sub-total
   10,337,364    10,864,061




Retained earnings before appropriation
   2,606,814    2,980,523





Total
   14,611,566    15,620,006




i. ~~Legal reserve~~
In accordance with the Banking Act, legal reserve are appropriated at least one tenth of the earnings after tax on every dividend declaration, not exceeding the paid in capital. This reserve may not be used other than for offsetting a deficit or transferring to capital.
~~ii.~~ ~~Other legal reserve~~
Other legal reserves are appropriated in the branches located in Japan, Vietnam and Bangladesh according to the banking laws of Japan, Vietnam and Bangladesh, respectively, and may be used to offset any deficit incurred in those branches.
~~iii.~~ ~~Business rationalization reserve~~
Pursuant to the Restriction of Special Taxation Act, the Group was previously required to appropriate, as a reserve for business rationalization, amounts equal to tax reductions arising from tax exemptions and tax credits up to December 31, 2001. The requirement was no longer effective from 2002.
~~iv.~~ ~~Reserve for financial structure improvement~~
From 2002 to 2014, the Finance Supervisory Services recommended banks in Korea to appropriate at least ten percent of net income after accumulated deficit for financial structure improvement, until tangible common equity ratio equals 5.5 percent. But this reserve is not available for payment of cash dividends; however, it can be used to reduce a deficit or be transferred to capital. Since 2015, reservation and appropriation became an autonomous judgment matter of the Group.
v. ~~Additional reserve and other voluntary reserve~~
~~Both of Additional reserve and other voluntary reserve are appropriated for capital adequacy and other management purpose.~~
~~vi.~~ ~~Regulatory reserve for credit loss~~
In accordance with Article 29 of the Regulation on Supervision of Banking Business (“RSBB”), if provisions for credit losses under IFRS for the accounting purpose are lower than provisions under RSBB, the Group discloses such shortfall amount as regulatory reserve for credit loss.
~~vii.~~ ~~Revaluation reserve~~
Revaluation reserve is the amount of limited dividends set by the board of directors to be the recognized as complementary capital when the gain or loss occurred in the property revaluation by adopting IFRS.
   For the years ended December 31
   2017    2018    2019
Financial assets at FVTPL (IFRS 9)
   —    54,243    50,619
Financial assets at FVTOCI
   —    280,371    474,751
Financial assets at amortized cost

Securities at amortized cost
   —    376,788    436,340
Loans and other financial assets at amortized cost:

Interest on due from banks
   —    112,581    141,330
Interest on loans
   —    8,832,485    9,443,740
Interest of other receivables
   —    28,031    29,990






Sub-total
   —    9,349,885    10,051,400






Financial assets at FVTPL (IAS 39)
   53,348    —    —
AFS financial assets
   239,030    —    —
HTM financial assets
   307,965    —    —
Loans and receivables:

Interest on due from banks
   83,325    —    —
Interest on loans
   7,835,957    —    —
Interest of other receivables
   31,062    —    —






Sub-total
   7,950,344    —    —






Total
   8,550,687    9,684,499    10,576,770






(2) ~~Changes in retained earnings~~
Details of interest expense recognized are as follows (Unit: Korean Won in millions):

   For the years ended December 31
   2015 2016 2017
Beginning balance
   14,165,358 13,726,122 14,611,566
Net income attributable to owners
   1,059,157 1,261,266 1,512,148
Dividends on common stock
   (504,952 ) (168,317 ) (336,636 )
Dividends on hybrid securities
   (183,320 ) (206,515 ) (167,072 )
Appreciation of merger losses
   (806,640 ) — —
Repayment of hybrid securities
   — (990 ) —
Retirement of treasury stock
   (3,481 ) — —


Ending balance
   13,726,122 14,611,566 15,620,006


~~32. REGULATORY RESERVE FOR CREDIT LOSS~~
In accordance with Paragraph 1 and 2 of Article 29 of the Regulation on Supervision of Banking Business (“RSBB”), if the estimated provisions for credit loss under IFRS for the accounting purpose are lower than those in accordance with the provisions under the RSBB, the Group shall disclose the difference as the planned regulatory reserve for credit loss.
~~(1)~~ ~~Balance of the planned regulatory reserve for credit loss is as follows (Unit: Korean Won in millions):~~

   For the years ended December 31
   2016    2017
Beginning balance
   2,255,252    2,438,191
Planned provision of regulatory reserve for credit loss
   182,939    140,266




Ending balance
   2,438,191    2,578,457




~~(2)~~ Planned reserves provided, adjusted net income after the planned reserves provided and adjusted earnings per share after the planned reserves provided are as follows (Unit: Korean Won in millions, except for earnings per share amount):

   For the years ended December 31
   2015    2016    2017
Net income
   1,075,392    1,277,533    1,530,088
Provision of regulatory reserve for credit loss
   499,110    182,939    140,266
Adjusted net income after the provision of regulatory reserve
   576,282    1,094,594    1,389,822
Adjusted EPS after the provision of regulatory reserve (Unit: Korean Won)
   584    1,320    1,817
   For the years ended December 31
   2017    2018    2019
Interest on deposits due to customers
   2,380,263    2,917,165    3,424,441
Interest on borrowings
   238,212    306,739    383,213
Interest on debentures
   638,653    720,394    777,322
Other interest expense
   72,909    89,250    89,002
Interest on lease liabilities
   —    —    9,086






Total
   3,330,037    4,033,548    4,683,064






~~33. DIVIDENDS~~
The Group’s dividends for the year ended December 31, 2016 and 2017 are 400 Won and 500 Won per share, respectively, and the total dividend amount to 269,308 million Won and 336,636 million Won, respectively. The Group paid out 67,328 million Won (100 Won per share) as an interim dividend during the year ended December 31, 2017. Meanwhile, the dividend for 2017 was approved on 23 March 2018.
~~34. NET INTEREST INCOME~~
~~(1)~~ ~~Interest income recognized is as follows (Unit: Korean Won in millions):~~

   For the years ended December 31
   2015    2016    2017
Financial assets at FVTPL
   63,143    63,408    53,348
AFS financial assets
   389,443    339,518    239,030
HTM financial assets
   418,065    360,054    307,965
Loans and receivables:

Interest on due from banks
   81,117    75,021    83,325
Interest on loans
   7,700,475    7,635,791    7,835,957
Interest of other receivables
   45,992    38,520    31,062






Sub-total
   7,827,584    7,749,332    7,950,344






Total
   8,698,235    8,512,312    8,550,687






~~(2)~~ ~~Interest expense recognized is as follows (Unit: Korean Won in millions):~~

   For the years ended December 31
   2015    2016    2017
Interest on deposits due to customers
   2,888,529    2,547,142    2,380,263
Interest on borrowings
   216,743    215,240    238,212
Interest on debentures
   707,772    619,255    638,653
Interest expense on others
   123,291    111,131    72,909






Total
   3,936,335    3,492,768    3,330,037






~~35.~~31. NET FEES AND COMMISSIONS INCOME

(1) ~~Fees~~
Details of fees and commissions income recognized ~~is as follows (Unit: Korean Won in millions):~~

   For the years ended December 31
   2015    2016    2017
Banking fees^(*)
   676,114    660,556    673,582
Guarantee fees
   78,922    66,549    65,779
Fees from project financing
   15,521    20,213    13,394
Credit card fees
   852,250    954,502    1,072,423
Brokerage fees
   67,692    70,928    80,872
Others
   66,841    92,722    163,148






Total
   1,757,340    1,865,470    2,069,198






~~(*)~~ ~~Banking fees include agency commission, fees income from electronic finance, fees income related to loan, fees for import letter of credit dealing, commission received on foreign exchange and others.~~
~~(2)~~ ~~Fees and commissions expense incurred is as follows (Unit: Korean Won in millions):~~

   For the years ended December 31
   2015    2016    2017
Fees paid
   133,909    162,170    164,834
Credit card commissions
   643,524    760,913    828,363
Brokerage commissions
   615    739    558
Others
   2,496    4,517    4,977






Total
   780,544    928,339    998,732






~~36. DIVIDEND INCOME~~
~~Dividend income recognized is as follows (Unit: Korean Won in millions):~~

   For the years ended December 31
   2015    2016    2017
Dividend from financial assets at FVTPL
   1,217    996    446
Dividend from AFS financial assets
   101,706    183,514    124,546






Total
   102,923    184,510    124,992






~~37. GAINS (LOSSES) ON FINANCIAL ASSETS AT FVTPL~~
~~(1)~~ ~~Details of gains or losses related to financial assets at FVTPL~~ are as follows (Unit: Korean Won in millions):

   For the years ended December 31
   2015    2016 2017
Gains on financial assets held for trading
   171,137    185,786 6,123
Gains (losses) of financial assets designated at FVTPL
   69,205    (71,399 ) (110,950 )




Total
   240,342    114,387 (104,827 )




   For the years ended December 31
   2017    2018    2019
Fees and commission received for brokerage
   164,041    162,344    156,578
Fees and commission received related to credit
   166,364    173,233    189,597
Fees and commission received for electronic finance
   110,105    121,250    137,289
Fees and commission received on foreign exchange handling
   58,383    60,433    61,756
Fees and commission received on foreign exchange
   61,552    66,036    92,408
Fees and commission received for guarantee
   65,779    65,254    71,106
Fees and commission received on credit card
   1,072,423    598,705    548,580
Fees and commission received on securities business
   80,872    96,379    113,346
Fees and commission from trust management
   141,766    177,456    180,290
Fees and commission received on credit information
   11,737    12,985    12,626
Other fees
   136,176    146,689    145,750






Total
   2,069,198    1,680,764    1,709,326






(2)
Details of fees and commissions expense incurred are as follows (Unit: Korean Won in millions):
   For the years ended December 31
   2017    2018    2019
Fees and commissions paid
   164,834    174,669    189,789
Credit card commission
   828,363    428,613    407,689
Brokerage commission
   558    1,833    775
Others
   4,977    5,675    8,445






Total
   998,732    610,790    606,698






32. DIVIDEND INCOME
(1)
Details of dividend income recognized are as follows (Unit: Korean Won in millions):
   For the years ended December 31
   2017    2018    2019
Financial assets at FVTPL (IFRS 9)
   —    67,892    86,979
Financial assets at FVTPL (IAS 39)
   446    —    —
Financial assets at FVTOCI
   —    22,660    20,980
AFS financial assets
   124,546    —    —






Total
   124,992    90,552    107,959






(2)
Details of dividends related to financial assets at FVTOCI are as follows (Unit: Korean Won in millions):
     For the years ended December 31
       2018            2019
Dividend income recognized from assets held

Equity securities
   22,386    20,980
Dividend income recognized in assets derecognized
   274    —




Total
   22,660    20,980




33. NET GAIN OR LOSS ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS MANDATORILY MEASURED AT FAIR VALUE
(1)
Details of gains or losses related to net gain or loss on financial instruments at FVTPL (IFRS 9 and IAS 39) are as follows (Unit: Korean Won in millions):
   For the years ended December 31
   2017 2018    2019
Gain on financial instruments at fair value through profit or loss mandatorily measured at fair value
   — 196,959    58,692
Gain on financial instruments held for trading
   6,123 —    —
Gain(loss) on financial instruments at fair value through profit or loss designated as upon initial recognition
   — 17,484    (33,237 )
Loss on financial instruments designed as at fair value through profit or loss
   (110,950 ) —    —




Total
   (104,827 ) 214,443    25,455




(2) ~~Gains (losses)~~
Details of net gain or loss on financial ~~assets~~instruments at fair value through profit or loss mandatorily measured at fair value and financial instruments held for trading are as follows (Unit: Korean Won in millions):

         For the years ended December 31
         2015 2016 2017
Financial Assets at FVTPL
   Securities    Gain on valuation    7,735 9,323 2,764
      Gain on disposals    32,780 24,509 20,528
      Loss on valuation    (13,663 ) (12,681 ) (13,757 )
      Loss on disposals    (22,771 ) (11,524 ) (6,466 )



Sub-total
   4,081 9,627 3,069



Other financial assets
   Gain on valuation    10,195 13,628 6,524
      Gain on disposals    442 2,404 2,353
      Loss on valuation    (10,189 ) (14,033 ) (7,885 )
      Loss on disposals    (208 ) (1,644 ) (619 )



Sub-total
   240 355 373



Total
   4,321 9,982 3,442


Derivatives (for trading)

Interest rates derivatives

Gain on transactions and valuation
   1,240,353 1,423,606 1,088,192

Loss on transactions and valuation
   (1,251,673 ) (1,401,582 ) (1,043,312 )



Sub-total
   (11,320 ) 22,024 44,880



Currencies derivatives

Gain on transactions and valuation
   4,241,317 5,804,420 7,253,426

Loss on transactions and valuation
   (3,987,856 ) (5,683,357 ) (7,408,741 )



Sub-total
   253,461 121,063 (155,315 )



Equity derivatives

Gain on transactions and valuation
   92,400 293,657 511,220

Loss on transactions and valuation
   (166,528 ) (259,280 ) (397,462 )



Sub-total
   (74,128 ) 34,377 113,758



Other derivatives

Gain on transactions and valuation
   54,322 50,139 4,056

Loss on transactions and valuation
   (55,519 ) (51,799 ) (4,698 )



Sub-total
   (1,197 ) (1,660 ) (642 )


   Total    166,816 175,804 2,681



Total
   171,137 185,786 6,123


         For the years ended December 31
         2017 2018 2019
Financial assets at FVTPL (financial assets held for trading)
   Securities    Gain on valuation    2,764 137,237 121,794
      Gain on disposals    20,528 45,105 64,600
      Loss on valuation    (13,757 ) (25,499 ) (61,288 )
      Loss on disposals    (6,466 ) (26,728 ) (19,018 )



Sub-total
   3,069 130,115 106,088



Loans
   Gain on valuation    — 1,606 1,037
      Gain on disposals    — 4,136 519
      Loss on valuation    — (4,805 ) (21 )
      Loss on disposals    — (117 ) —



Sub-total
   — 820 1,535



Other

Gain on valuation
   6,524 2,050 2,062

financial

Gain on disposals
   2,353 530 1,901

assets

Loss on valuation
   (7,885 ) (2,280 ) (1,755 )

Loss on disposals
   (619 ) (86 ) (1,815 )



Sub-total
   373 214 393



Sub-total
   3,442 131,149 108,016


Derivatives
(Held for trading)

Interest rate derivatives

Gain on transactions and valuation
   1,088,192 1,255,581 1,507,254

Loss on transactions and valuation
   (1,043,312 ) (1,303,244 ) (1,615,833 )



Sub-total
   44,880 (47,663 ) (108,579 )



Currency derivatives

Gain on transactions and valuation
   7,253,426 4,935,922 6,872,513

Loss on transactions and valuation
   (7,408,741 ) (4,822,915 ) (6,855,447 )



Sub-total
   (155,315 ) 113,007 17,066



Equity derivatives

Gain on transactions and valuation
   511,220 486,560 839,196

Loss on transactions and valuation
   (397,462 ) (484,986 ) (796,336 )



Sub-total
   113,758 1,574 42,860



Other derivatives

Gain on transactions and valuation
   4,056 4,138 695

Loss on transactions and valuation
   (4,698 ) (5,246 ) (1,366 )



Sub-total
   (642 ) (1,108 ) (671 )



Sub-total
   2,681 65,810 (49,324 )



Total
   6,123 196,959 58,692


(3) ~~Gains (losses)~~
Details of net gain(loss) on financial ~~assets~~instruments at fair value through profit or loss designated as upon initial recognition and Losses on financial instruments designated as at ~~FVTPL~~fair value through profit or loss are as follows (Unit: Korean Won in millions):

   For the years ended December 31
           2015                 2016                 2017
Gain (loss) on equity-linked securities:

Gain (loss) on disposals of equity-linked securities
   (22,363 ) (24,165 ) (79,965 )
Gain (loss) on valuation of equity-linked securities
   89,863 (52,007 ) (32,511 )


Sub-total
   67,500 (76,172 ) (112,476 )


Gain (loss) on securities:

Gain (loss) on disposals of securities
   (62 ) 14 —
Gain on valuation of securities
   1,027 882 290


Sub-total
   965 896 290


Gain on other financial instruments:

Gain on valuation of other financial instruments
   740 3,877 1,236


Total
   69,205 (71,399 ) (110,950 )


   For the years ended December 31
           2017                 2018                 2019
Gain(loss) on equity-linked securities:

Loss on disposal of equity-linked securities
   (79,965 ) (2,058 ) (16,006 )
Gain(loss) on valuation of equity-linked securities
   (32,511 ) 17,945 (17,231 )


Sub-total
   (112,476 ) 15,887 (33,237 )


Gain on other securities:

Gain on valuation of other securities
   290 — —


Sub-total
   290 — —


Gain on other financial instruments:

Gain on valuation of other financial instruments
   1,236 1,597 —


Total
   (110,950 ) 17,484 (33,237 )


~~38.~~34. NET ~~LOSSES~~GAIN OR LOSS ON FINANCIAL ASSETS AT FVTOCI AND AFS FINANCIAL ASSETS
~~Gains (losses)~~Details of net gain or loss on financial assets at FVTOCI and AFS financial assets recognized are as follows (Unit: Korean Won in millions):

   For the years ended December 31
           2015                 2016                 2017
Gains on redemption of securities
   1,089 721 47
Gains on transaction of securities
   130,457 47,985 223,961
Impairment losses on securities
   (134,827 ) (49,741 ) (31,300 )


Total
   (3,281 ) (1,035 ) 192,708


   For the years ended December 31
           2017                 2018                    2019
Gain on redemption of securities
   47 53    15
Gain on transaction of securities
   223,961 1,994    11,000
Impairment loss on securities
   (31,300 ) —    —




Total
   192,708 2,047    11,015




~~39.~~35. REVERSAL OF (PROVISION FOR) IMPAIRMENT LOSSES DUE TO CREDIT LOSS
~~Impairment~~Reversal of (provision for) impairment losses ~~on loans and receivables, guarantees and loan commitment recognized for~~due to credit loss are as follows (Unit: Korean Won in millions):

   For the years ended December 31
           2015                 2016                 2017
Provision due to credit loss
   (1,112,139 ) (890,763 ) (862,273 )
Reversal of provision on/(provision for) guarantees
   140,318 59,780 55,424
Reversal of provision on/(provision for) loan commitment
   5,175 (3,093 ) 21,716


Total
   (966,646 ) (834,076 ) (785,133 )


   For the years ended December 31
           2017                 2018                 2019
Impairment loss due to credit loss on financial assets measured at FVTOCI
   — (2,027 ) (3,297 )
Reversal of (provision for) impairment loss due to credit loss on securities at amortized cost
   — (1,922 ) 1,415
Provision for credit loss on loan and other financial assets at amortized cost
   — (415,084 ) (385,758 )
Impairment loss due to credit loss
   (862,273 ) — —
Reversal of provision on guarantee
   55,424 105,985 4,352
Reversal of provision on (provision for) unused loan commitment
   21,716 (16,526 ) 9,044


Total
   (785,133 ) (329,574 ) (374,244 )


~~40.~~36. GENERAL AND ADMINISTRATIVE EXPENSES AND OTHER NET OPERATING ~~INCOMES~~INCOME (EXPENSES)

(1) ~~Administrative~~
Details of general and administrative expenses recognized are as follows (Unit: Korean Won in millions):

   For the years ended December 31
   2015    2016    2017
Employee benefits
Short term Salaries    1,262,786    1,323,007    1,317,826

employee benefits

Others
   381,283    466,585    559,562

Retirement benefit service costs^(*)
   135,754    156,356    146,848

Termination
   73,119    179,286    299,562






Sub-total
   1,852,942    2,125,234    2,323,798






Depreciation and amortization
   236,958    248,269    183,601
Other general and administrative expenses
Rent    295,871    311,992    313,080

Taxes and dues
   103,580    102,531    111,248

Service charges
   233,860    244,543    198,828

IT expenses
   100,026    83,978    70,936

Telephone and communication expenses
   60,880    63,699    65,015

Operating promotion expenses
   46,638    48,115    43,850

Advertising
   58,914    76,153    68,942

Printing
   10,249    9,502    8,633

Traveling expenses
   9,601    11,681    13,064

Supplies
   6,822    6,827    6,795

Insurance premium
   7,236    8,092    8,548

Reimbursement
   23,779    26,846    27,516

Maintenance
   14,565    16,470    16,081

Water, light and heating
   15,205    15,006    14,165

Vehicle maintenance
   10,400    9,987    9,902

Others
   62,861    69,551    46,799






Sub-total
   1,060,487    1,104,973    1,023,402






Total
   3,150,387    3,478,476    3,530,801






~~(*)~~ This includes the amount the Group paid for the Defined Contribution type pension plan of 3,946 million Won in addition to the expenses related to the Defined Benefit type pension plan of 142,902 million Won for the year ended December 31, 2017. For the details, please see Note 24 (7).
         For the years ended December 31
         2017    2018    2019
Salaries
   Short-term    Salaries    1,317,826    1,484,236    1,584,791
   employee benefits    Employee benefits    559,562    468,012    475,238
   Share based payments

   —    —    6,328
   Retirement benefit service costs

   146,848    145,149    168,423
   Termination       299,562    225,106    156,441







Sub-total

   2,323,798    2,322,503    2,391,221






Depreciation and amortization
         183,601    216,735    481,176







Other general and administrative expenses
   Rent       313,080    321,198    85,705
   Taxes and public dues

   111,248    115,454    137,137
   Service charges

   198,828    222,530    235,117
   Computer and IT related

   70,936    88,689    93,573
   Telephone and communication

   65,015    70,618    70,220
   Operating promotion       43,850    43,540    45,594
   Advertising       68,942    72,450    85,887
   Printing       8,633    8,601    7,845
   Traveling       13,064    12,757    13,255
   Supplies       6,795    7,071    7,736
   Insurance premium       8,548    8,355    9,668
   Reimbursement       27,516    23,474    23,577
   Maintenance       16,081    17,384    18,495
   Water, light and heating       14,165    14,686    15,272
   Vehicle maintenance       9,902    10,264    10,564
   Others       46,799    47,724    34,035







Sub-total
      1,023,402    1,084,795    893,680







Total
      3,530,801    3,624,033    3,766,077






(2) ~~Other~~
Details of other operating ~~incomes~~income recognized are as follows (Unit: Korean Won in millions):

   For the years ended December 31
   2015    2016    2017
Gains on transaction of foreign exchange
   3,352,318    4,791,772    3,391,095
Gains on disposal of loans and receivables
   186,939    204,239    205,490
Gains on transactions of derivatives
   59,003    130    122
Gains on fair value hedged items
   25,235    99,302    53,532
Others^(*)
   158,806    112,079    86,159






Total
   3,782,301    5,207,522    3,736,398






   For the years ended December 31
   2017    2018    2019
Gain on transactions of foreign exchange
   3,391,095    1,227,561    602,115
Gain on disposals of loans and receivables^(*1)
   205,490    —    —
Gain related to derivatives
(Designated for hedging)
   122    35,810    126,651
Gain on fair value hedged items
   53,532    42,797    231
Others^(*2)
   86,159    82,417    45,706






Total
   3,736,398    1,388,585    774,703






(*)1) ~~Others include such incomes~~
Gain (loss) on disposal of loan and receivables occurred during the year ended December 31, 2018 was presented as a separate account named ‘Net gain related to financial assets at amortized cost’ in accordance with the adoption of IFRS 9.
(*2)
Other income includes income amounting to ~~137,187 million Won, 74,700~~29,336 million Won and ~~29,336~~29,316 million Won for the ~~year~~years ended December ~~2015, 2016~~31, 2017 and ~~2017,~~2018, respectively, that the Group recognized for it is to receive from other creditor financial institutions in accordance with the creditor financial institutions committee agreement.
(3) ~~Other~~
Details of other operating expenses recognized are as follows (Unit: Korean Won in millions):

   For the years ended December 31
   2015    2016    2017
Losses on transaction of foreign exchange
   3,429,638    4,706,055    2,886,535
KDIC deposit insurance fees
   266,031    298,804    304,055
Contribution to miscellaneous funds
   343,703    295,601    286,000
Losses on disposal of loans and receivables
   43,266    4,265    9,221
Losses related to derivatives
   20,982    98,981    109,569
Losses on fair value hedged items
   56,532    475    —
Others^(*)
   232,210    171,120    172,331






Total
   4,392,362    5,575,301    3,767,711






   For the years ended December 31
   2017    2018    2019
Losses on transactions of foreign exchange
   2,886,535    991,423    192,331
KDIC deposit insurance premium
   304,055    315,315    333,600
Contribution to miscellaneous funds
   286,000    298,416    317,667
Losses on disposals of loans and receivables^(*1)
   9,221    —    —
Losses related to derivatives (Designated for hedging)
   109,569    36,483    3,686
Losses on fair value hedged items
   —    17,299    86,214
Others^(*2)
   172,331    124,240    143,786






Total
   3,767,711    1,783,176    1,077,284






(*)1)
Loss on disposal of loan and receivables occurred during the year ended December 31, 2018 was presented as a separate account named ‘Net gain related to financial assets at amortized cost’ in accordance with the adoption of IFRS 9.
(*2)
Others include such expenses amounting to ~~154,897 million Won, 109,063~~5,237 million Won and ~~5,237~~1,594 million Won for the ~~year~~years ended December 31, ~~2015, 2016~~2017 and ~~2017,~~2018, respectively, that are related to the ~~Group recognized for it is to carry out a payment~~Group’s expected payments to other creditor financial institutions in accordance with the creditor financial institutions committee agreement. In addition, ~~other expense~~they include 48,292 million Won, 51,770 million Won and 22,317 million Won for the ~~year~~years ended December 31, 2017, ~~includes 48,292 million Won~~2018 and 2019, respectively, of intangible asset amortization expense.

~~41.~~(4) ~~OTHER NETNON-OPERATING~~ ~~INCOME~~
Share-based payment
Details of performance condition share-based payment granted to executives as of December 31, 2019 is as follows.
1) Performance condition share-based payment
Subject to Shares granted for the year 2019
Type of payment Cash-settled
Vesting period January 1, 2019 ~ December 31, 2022
Date of payment 2023-01-01
Number of shares measured as of the closing date^(*) 524,746 shares

(*)
The number of payable stocks is granted at the initial contract date and the payment rate is determined based on the achievement of thepre-determined performance targets. Performance is evaluated as long-term performance indication including relative shareholder return, net income, return on equity (ROE),non-performing loan ratio and job performance.
2) The Group accounts for performance condition share-based payments according to the cash-settled method and the fair value of the liabilities is reflected in the compensation costs byre-measuring every closing period. As of December 31, 2019, the book value of the liabilities related to the performance condition share-based payments recognized by the Group is 6,328 million Won.
37. OTHERNON-OPERATING INCOME (EXPENSES)
(1)
Details of ~~gain~~gains or ~~loss~~losses on valuation of investments in joint ventures and associates are as follows (Unit: Korean Won in millions):

   For the years ended December 31
       2015         2016         2017
Gain on valuation
   41,363 36,757 83,506
Loss on valuation
   (55,176 ) (55,091 ) (70,117 )
Impairment loss
   (56,311 ) (1,173 ) (114,903 )


Total
   (70,124 ) (19,507 ) (101,514 )


   For the years ended December 31
   2017 2018 2019
Gains on valuation of investments in joint ventures and associates
   83,506 25,791 103,775
Losses on valuation of investments in joint ventures and associates
   (70,117 ) (22,595 ) (16,144 )
Impairment losses of investments in joint ventures and associates
   (114,903 ) (177 ) (3,634 )


Total
   (101,514 ) 3,019 83,997


(2) ~~Other~~
Details of othernon-operating income and ~~expense~~expenses recognized are as follows (Unit: Korean Won in millions):

   For the years ended December 31    For the years ended December 31
       2015         2016         2017        2017 2018 2019
Othernon-operating income
   272,610 132,272 84,361    84,361 129,709 68,459
Othernon-operating expense
   (102,126 ) (133,582 ) (190,083 )
Othernon-operating expenses
   (190,083 ) (87,157 ) (229,383 )




Total
   170,484 (1,310 ) (105,722 )    (105,722 ) 42,552 (160,924 )




(3) ~~Other~~
Details of othernon-operating ~~incomes~~income recognized are as follows (Unit: Korean Won in millions):

   For the years ended December 31
       2015            2016            2017
Rental fee income
   8,225    7,291    6,973
Gains on disposal of investment in joint ventures and associates
   61,653    23,457    39,932
Gains on disposal of premises and equipment and other assets
   6,814    1,885    5,028
Reversal of impairment loss on premises and equipment and other assets
   539    3,581    666
Others^(*)
   195,379    96,058    31,762






Total
   272,610    132,272    84,361






~~(*)~~ Others include the receipt of guaranteed payment, which was amounting to 132,784 million Won, during the year ended December 31, 2015 that the Group received in accordance with the final irrevocable verdict for the payment of commitment (Note 44).
   For the years ended December 31
       2017            2018            2019
Rental fee income
   6,973    6,835    10,106
Gains on disposal of investments in joint ventures and associates
   39,932    50,511    —
Gains on disposal of premises and equipment, intangible assets and other assets
   5,028    30,278    1,632
Reversal of impairment loss of premises and equipment, intangible assets and other assets
   666    761    103
Others
   31,762    41,324    56,618






Total
   84,361    129,709    68,459






(4) ~~Other~~
Details of othernon-operating expenses recognized are as follows (Unit: Korean Won in millions):

   For the years ended December 31    For the years ended December 31
       2015            2016            2017        2017    2018    2019
Depreciation on investment properties
   3,806    3,762    3,902    3,902    4,045    2,225
Interest expenses of rent leasehold deposits
   688    496    459
Interest expenses of refundable deposits
   459    620    834
Losses on disposal of investment in joint ventures and associates
   10    15,060    38,713    38,713    2,931    —
Losses on disposal of premises and equipment and other assets
   2,707    9,718    9,994
Impairment losses on premises and equipment and other assets
   2,990    1,936    390
Losses on disposal of premises and equipment, intangible assets and other assets
   9,994    1,160    3,433
Impairment losses of premises and equipment, intangible assets and other assets
   390    87    28,295
Donation
   46,266    43,939    98,132    98,132    51,983    62,545
Others
   45,659    58,671    38,493    38,493    26,331    132,051












Total
   102,126    133,582    190,083    190,083    87,157    229,383












~~42.~~
38. INCOME TAX EXPENSE

(1) ~~Income~~
Details of income tax expenses are as follows (Unit: Korean Won in millions):

   For the years ended December 31
           2015                 2016                 2017
Current tax expense

Current tax expense in respect of the current year
   362,552 332,996 471,669
Adjustments recognized in the current period in relation to the current tax of prior periods
   (27,038 ) (22,138 ) (5,209 )


Sub-total
   335,514 310,858 466,460


Deferred tax expense

Deferred tax expense (benefit) relating to the origination and reversal of temporary differences
   44,884 (18,766 ) (47,464 )
Less: Deferred tax charged directly to other comprehensive income
   (3,844 ) (16,236 ) 422


Sub-total
   41,040 (35,002 ) (47,042 )


Income tax expense
   376,554 275,856 419,418
   For the years ended December 31
   2017 2018    2019
Current tax expense:

Current tax expense with respect to the current period
   471,669 432,645    612,680
Adjustments recognized in the current period in relation to the tax expense of prior periods
   (5,209 ) 5,923    (65,227 )




Sub-total
   `466,460 438,568    547,453




Deferred tax expense (income):

Changes in deferred tax assets (liabilities) relating to the temporary differences
   (47,042 ) 314,655    138,000




Income tax expense
   419,418 753,223    685,453




(2)
Income tax expense ~~(benefit) can be~~ reconciled to net income ~~(loss)~~ before income tax expense is as follows (Unit: Korean Won in millions):

   For the years ended December 31    For the years ended December 31
           2015                 2016                 2017            2017 2018 2019
Net income before income tax expense
   1,451,946 1,553,389 1,949,506    1,949,506 2,804,872 2,723,049
Income from continuing operations before income tax
   1,451,946 1,553,389 1,949,506
Tax calculated at statutory tax rate^(*)
   350,909 375,458 471,318    471,318 760,978 738,476
Adjustments

Adjustments:

Effect of income that is exempt from taxation
   (56,247 ) (75,166 ) (55,983 )    (55,983 ) (49,418 ) (61,730 )
Effect of expense that is not deductible in determining taxable profit
   50,152 13,664 22,254
Effect of expenses that are not deductible in determining taxable income
   22,254 18,639 31,549
Adjustments recognized in the current period in relation to the current tax of prior periods
   (27,038 ) (22,138 ) (5,209 )    (5,209 ) 5,923 (65,227 )
Effect on deferred tax balances due to the change in income tax rate from 24.2% to 27.5% (effective January 1, 2018)
   — — (35,987 )
Others
   58,778 (15,962 ) 23,025    (12,962 ) 17,101 42,385




Sub-total
   25,645 (99,602 ) (51,900 )    (51,900 ) (7,755 ) (53,023 )




Income tax expense
   376,554 275,856 419,418    419,418 753,223 685,453


Effective tax rate
      21.5 % 26.9 % 25.2 %
   25.93 % 17.76 % 21.51 %

(*) ~~Applicable~~
The applicable income tax ~~rate;~~rate: 1) 11% for taxable income below 200 million Won, 2) 22% for ~~from~~above 200 million Won toand below 20 billion Won, 3) 24.2% for above 20 billion Won and below 300 billion Won, 4) 27.5% for above 300 billion Won.
(3) ~~Deferred tax assets~~
Changes in cumulative temporary differences for the years ended December 31, 2017, 2018 and ~~liabilities~~2019, are as follows (Unit: Korean Won in millions):

   For the year ended December 31, 2015
   Beginning
balance
(*1) Recognized as
income (loss) Recognized as
other
comprehensive
income (loss) Ending
balance
Gain (loss) on financial assets at FVTPL
   422,910 22,819 — 445,729
Gain (loss) onavailable-for-sale financial assets
   (105,556 ) 94 (16,074 ) (121,536 )
Gain (loss) on valuation using the equity method of accounting
   21,156 (14,936 ) (1,114 ) 5,106
Gain (loss) on valuation of derivatives
   (48,438 ) 8,664 — (39,774 )
Accrued income
   (75,094 ) (7,054 ) — (82,148 )
Allowance for loan loss
   (59,428 ) 8,924 — (50,504 )
Loan and receivables written off
   6,921 47,304 — 54,225
Loan origination costs and fees
   (88,476 ) (15,436 ) — (103,912 )
Defined benefit liability
   151,666 26,912 24,845 203,423
Deposits with employee retirement insurance trust
   (135,474 ) (51,570 ) — (187,044 )
Provision for guarantee
   84,530 (15,305 ) — 69,225
Other provision
   37,029 (9,131 ) — 27,898
Others
   24,355 (42,324 ) (11,501 ) (29,470 )


Net deferred tax assets
   236,101 (41,039 ) (3,844 ) 191,218


   For the year ended December 31, 2016    For the year ended December 31, 2017
   Beginning
balance Recognized as
income (loss) Recognized as
other
comprehensive
income (loss) Ending
balance    Beginning
balance Recognized
as income
(expense) Recognized as
other
comprehensive
income
(expense) Ending
balance
Gain on financial assets at FVTPL
   445,729 (18,524 ) — 427,205
Gain (loss) on AFS financial assets
   (121,536 ) 57 (666 ) (122,145 )
Gain (loss) on financial assets
   407,128 72,945 (1,008 ) 479,065
Gain (loss) on valuation using the equity method of accounting
   5,106 26,500 1,337 32,943    32,859 (6,473 ) (1,904 ) 24,482
Gain (loss) on valuation of derivatives
   (39,774 ) (4,079 ) — (43,853 )    (43,818 ) 33,806 (248 ) (10,260 )
Accrued income
   (82,148 ) 12,188 — (69,960 )    (69,959 ) 8,972 — (60,987 )
Provision for loan losses
   (50,504 ) 3,693 — (46,811 )    (46,811 ) (886 ) — (47,697 )
Loan and receivables written off
   54,225 (310 ) — 53,915    53,915 (44,138 ) — 9,777
Loan origination costs and fees
   (103,912 ) (4,190 ) — (108,102 )    (108,102 ) (29,218 ) — (137,320 )
Defined benefit liability
   203,423 32,536 (10,914 ) 225,045    225,045 54,533 4,656 284,234
Deposits with employee retirement insurance trust
   (187,044 ) (39,277 ) — (226,321 )    (226,321 ) (61,012 ) — (287,333 )
Provision for guarantee
   69,225 (28,087 ) — 41,138    41,138 (10,536 ) — 30,602
Other provision
   27,898 4,494 — 32,392    32,392 12,761 — 45,153
Others
   (29,470 ) 50,001 (5,993 ) 14,538
Others^(*)
   (87,479 ) 16,289 (1,075 ) (72,265 )




Net deferred tax assets
   191,218 35,002 (16,236 ) 209,984    209,987 47,043 421 257,451




(*1)) ~~The beginning balance incorporates the deferred tax assets (liabilities) from subsidiaries that were reclassified into disposal group held for sale and disposal groups held for distribution to owners.~~

   For the year ended December 31, 2017
   Beginning
balance Recognized as
income (expense) Recognized as
other
comprehensive
income (expense) Ending
balance
Gain on financial assets at FVTPL
   427,205 70,996 — 498,201
Gain (loss) on AFS financial assets
   (122,145 ) 1,011 (1,008 ) (122,142 )
Gain (loss) on valuation using the equity method of accounting
   32,943 (6,473 ) (1,904 ) 24,566
Gain (loss) on valuation of derivatives
   (43,853 ) 33,806 (248 ) (10,295 )
Accrued income
   (69,960 ) 8,972 — (60,988 )
Provision for loan losses
   (46,811 ) (886 ) — (47,697 )
Loan and receivables written off
   53,915 (44,138 ) — 9,777
Loan origination costs and fees
   (108,102 ) (29,218 ) — (137,320 )
Defined benefit liability
   225,045 54,533 4,656 284,234
Deposits with employee retirement insurance trust
   (226,321 ) (61,012 ) — (287,333 )
Provision for guarantee
   41,138 (10,536 ) — 30,602
Other provision
   32,392 12,761 — 45,153
Others^(*2)
   14,538 17,227 (1,074 ) 30,691


Net deferred tax assets
   209,984 47,043 422 257,449


~~(*2)~~ Among the deferred tax assets and liabilities classified as ‘Others,’ the deferred tax asset arising from ~~accumulated deficit~~unused tax losses amounts to 15,652 million Won.
For the year ended December 31, 2018
IFRS 9 adoption effect
Beginning
balance Recognized
as retained
earnings Recognized as
other
comprehensive
income (loss) Beginning
balance
after
IFRS 9
adoption Business
combination Recognized
as income
(expense) Recognized as
other
comprehensive
income
(expense)^(*2) Ending
Balance
Gain (loss) on financial assets
479,065 (150,140 ) 149,796 478,721 — (102,170 ) (4,205 ) 372,346
Gain on valuation using the equity method of accounting
24,482 — — 24,482 — 3,203 669 28,354
Gain (loss) on valuation of derivatives
(10,260 ) (3,990 ) — (14,250 ) — (13,617 ) 360 (27,507 )
Accrued income
(60,987 ) — — (60,987 ) 621 4,520 — (55,846 )
Provision for loan losses
(47,697 ) 47,446 — (251 ) 399 (52,493 ) — (52,345 )
Loan and receivables written off
9,777 — — 9,777 — (3,105 ) — 6,672
Loan origination costs and fees
(137,320 ) 36 — (137,284 ) — (17,147 ) — (154,431 )
Defined benefit liability
284,234 — — 284,234 317 43,821 31,715 360,087
Deposits with employee retirement insurance trust
(287,333 ) — — (287,333 ) — (31,092 ) 95 (318,330 )
Provision for guarantee
30,602 1,370 — 31,972 — (20,598 ) — 11,374
Other provision
45,153 25,879 — 71,032 — 4,162 — 75,194
Others^(*1)
(72,265 ) 4,917 — (67,348 ) 44 (130,137 ) (6,642 ) (204,083 )

Net deferred tax assets
257,451 (74,482 ) 149,796 332,765 1,381 (314,653 ) 21,992 41,485

(*1)
Among the deferred tax assets and liabilities classified as ‘Others,’ the deferred tax asset arising from unused tax losses amounts to 18,154 million Won.
(*2)
Includes 1,429 million Won presented onnon-controlling interests.
   For the year ended December 31, 2019
   Beginning
balance Business
combination Recognized
as income
(expense) Recognized as
other
comprehensive
income
(expense)^(*2) Ending
Balance
Gain (loss) on financial assets
   372,346 1,360 (91,781 ) (3,573 ) 278,352
Gain (loss) on valuation using the equity method of accounting
   28,354 90 (17,648 ) (83 ) 10,713
Gain (loss) on valuation of derivatives
   (27,507 ) 6 (48,217 ) 306 (75,412 )
Accrued income
   (55,846 ) (52 ) (10,486 ) — (66,384 )
Provision for loan losses
   (52,345 ) — (366 ) — (52,711 )
Loan and receivables written off
   6,672 — 221 — 6,893
Loan origination costs and fees
   (154,431 ) — (8,011 ) — (162,442 )
Defined benefit liability
   360,087 1,131 21,234 13,850 396,302
Deposits with employee retirement insurance trust
   (318,330 ) (1,131 ) (62,458 ) 143 (381,776 )
Provision for guarantee
   11,374 — (3,459 ) — 7,915
Other provision
   75,194 76 10,958 2,228 88,456
Others^(*1)
   (204,083 ) (6,927 ) 72,013 (5,687 ) (144,684 )


Net deferred tax assets
   41,485 (5,447 ) (138,000 ) 7,184 (94,778 )


(*1)
Among the deferred tax assets and liabilities classified as ‘Others,’ the deferred tax asset arising from unused tax losses amounts to 21,656 million Won.
(*2)
Includes 2,737 million Won presented onnon-controlling interests.
(4) ~~Unrecognised~~
Unrealizable temporary differences are as follows (Unit: Korean Won in millions):

   December 31, 2016 December 31, 2017
Deductible temporary differences^(*)
   59,803 126,818
Unused tax losses
   192,138 96,135
Taxable temporary differences^(*)
   (1,263,200 ) (1,298,586 )


Total
   (1,011,259 ) (1,075,633 )


   December 31, 2018 December 31, 2019
Deductible temporary differences
   272,911 171,714
Tax loss carry forward
   149,035 41,546
Taxable temporary differences
   (868,541 ) (8,024,406 )


Total
   (446,595 ) (7,811,146 )


No deferred income tax asset has been recognized for the deductible temporary difference of 165,679 million Won associated with investments in subsidiaries and associates as of December 31, 2019, because it is not probable that the temporary differences will be reversed in the foreseeable future. 6,035 million Won associated with others, respectively, as of December 31, 2019, due to the uncertainty that these will be realized in the future.
No deferred income tax liability has been recognized for the taxable temporary difference of 8,024,406 million Won associated with investment in subsidiaries and associates as of December 31, 2019, due to the following reasons:
The Group is able to control the timing of the reversal of the temporary difference.
It is probable that the temporary difference will not be reversed in the foreseeable future.
As of December 31, 2019, the expected extinctive date of tax loss carry forward that are not recognized as deferred tax assets are as follows (Unit: Korean Won in millions):

~~(*)~~ The amounts in the tabular disclosure at 31 December 2016 have been restated by (164,649) million Won relating to Deductible temporary differences and (394,659) million Won relating to Taxable temporary differences, respectively, due to an error in the previous year’s disclosure.
1 year or less 1 – 2 years 2 – 3 years More than 3 years
Tax loss carry forward
— — — 41,546

(5) ~~Deferred~~
Details of accumulated deferred tax charged directly to other ~~comprehensive income is~~equity are as follows (Unit: Korean Won in millions):

   December 31, 2016 December 31, 2017
Loss onavailable-for-sale financial assets
   (113,161 ) (114,169 )
Share of other comprehensive gain (loss) of jointly controlled entities and associates
   950 (954 )
Gain on foreign currency translation of foreign operations
   16,930 15,855
Remeasurements
   51,661 56,317
Loss on valuation of cash flow hedges
   — (248 )


Total
   (43,620 ) (43,199 )


   December 31, 2018 December 31, 2019
Gain on valuation of financial assets at FVTOCI
   31,422 27,849
Share of other comprehensive gain (loss) of and associates
   (285 ) 1,748
Gain on foreign currency translation of foreign operations
   8,183 3,774
Remeasurements of the net defined benefit liability
   88,127 102,120
Gain on derivatives designated as cash flow hedge
   1,140 280


Total
   128,587 135,771


(6)
Current tax assets and liabilities are as follows (Unit: Korean Won in millions):

   December 31, 2016    December 31, 2017    December 31, 2018    December 31, 2019
Current tax assets
   6,229    4,722    20,730    47,367
Current tax liabilities
   171,192    232,600    159,078    182,690
39. EARNINGS PER SHARE (“EPS”)

~~(7)~~(1) ~~Deferred tax assets and liabilities are as follows~~
Basic EPS is calculated by dividing net income attributable to common shareholders by weighted-average number of common shares outstanding (Unit: Korean Won in ~~millions)~~millions, except for EPS and number of shares):

   December 31, 2016    December 31, 2017
Deferred tax assets
   232,007    280,130
Deferred tax liabilities
   22,023    22,681




Net deferred tax assets
   209,984    257,449




   For the years ended December 31
   2017 2018 2019
Net income attributable to owners
   1,512,148 2,033,182 1,872,207
Dividends to hybrid securities
   (167,072 ) (151,194 ) (4,362 )
Net income attributable to common shareholders
   1,345,076 1,881,988 1,867,845
Weighted-average number of common shares outstanding
   673 million shares 673 million shares 685 million shares
Basic EPS (Unit: Korean Won)
   1,999 2,796 2,727

~~43.~~(2) ~~EARNINGS PER SHARE (“EPS”)~~
The weighted average number of common shares outstanding is as follows:
~~Basic EPS is calculated by dividing net income by weighted average number of common shares outstanding (Unit: Korean Won in millions except for EPS and number of shares):~~

For the year ended December 31, 2018


Period
   Number of
shares    Dates    Accumulated
number of shares
outstanding during
period
Common shares issued at the beginning of the period
   2018-01-01 ~2018-12-31    673,271,226    365    245,743,997,490



Sub-total (①)

   245,743,997,490


Weighted average number of common shares outstanding (②=(①/365)

   673,271,226


   For the years ended December 31
   2015 2016 2017
Net income attributable to common shareholders
   1,059,157 1,261,266 1,512,148
Dividends to hybrid securities
   (183,320 ) (206,515 ) (167,072 )
Net income attributable to common shareholders
   875,837 1,054,751 1,345,076
Weighted average number of common shares outstanding
   673 million shares 673 million shares 673 million shares
Basic Earnings Per Share
   1,301 1,567 1,999

For the year ended December 31, 2019


Period
   Number of
shares Dates    Accumulated
number of shares
outstanding during
period
Common shares issued at the beginning of the period
   2019-01-01 ~2019-12-31    673,271,226 365    245,743,997,490
Purchase of treasury stock
   2019-01-08 ~2019-12-31    (11,453,702 ) 358    (4,100,425,316 )
Disposal of treasury stock
   2019-03-22 ~2019-12-31    18,346,782 285    5,228,832,870
Disposal of treasury stock^(*)
   2019-09-26 ~2019-12-31    28,890,707 97    2,802,398,579
Disposal of treasury stock^(*)
   2019-11-12 ~2019-12-31    13,212,670 40    528,506,800



Sub-total (①)

   250,203,310,423


Weighted average number of common shares outstanding (②=(①/365)

   685,488,522


(*)
Woori Bank disposed 42,103,377 shares of Woori Financial Group Inc. which were acquired through comprehensive stock exchange with the shares of Woori Card Co., Ltd., and its parent company, Woori Financial Group Inc.
Diluted EPS is equal to basic EPS because there is no dilution effect for the ~~year~~years ended December 31, ~~2015, 2016~~2018 and ~~2017.~~2019.
40. CONTINGENT LIABILITIES AND COMMITMENTS
~~44.~~ ~~CONTINGENT LIABILITIES AND COMMITMENTS~~

(1)
Details of guarantees are as ~~follow~~follows (Unit: Korean Won in millions):

   December 31, 2016    December 31, 2017    December 31, 2018    December 31, 2019
Confirmed guarantees

Guarantee for loans
   79,566    157,299    125,870    89,699
Acceptances
   504,354    320,519    371,525    391,688
Letters of guarantees
   97,606    108,238
Guarantees in acceptances of imported goods
   158,179    224,746
Other confirmed guarantees
   7,588,661    6,288,965    6,452,791    6,982,889




Sub-total
   7,108,365    7,689,022




Unconfirmed guarantees

Local letters of credit
   305,057    193,096
Letters of credit
   3,322,731    3,081,390
Other unconfirmed guarantees
   669,677    771,378




Sub-total
   4,297,465    4,045,864




Commercial paper purchase commitments and others
   1,260,587    884,031








Total
   8,270,187    6,875,021    12,666,417    12,618,917








Unconfirmed guarantees

Local letter of credit
   397,588    383,117
Letter of credit
   3,844,345    3,637,787
Other unconfirmed guarantees
   859,768    505,689




Total
   5,101,701    4,526,593




CP purchase commitments and others
   1,389,896    1,458,101

(2)
Details of unused loan commitments and others are as ~~follow~~follows (Unit: Korean Won in millions):

   December 31, 2016    December 31, 2017    December 31, 2018    December
31, 2019
Loan commitments
   83,795,496    80,760,325    97,796,704    103,651,674
Other commitments
   4,840,593    4,546,090    5,041,314    5,993,608
(3) Litigation case
~~(3)~~ ~~Litigation case~~
~~The~~Legal cases where the Group ~~had filed lawsuits~~is involved are as follows (Unit: Korean Won in ~~millions except for number of cases)~~millions):

   December 31, 2016    December 31, 2017
   As plaintiff    As defendant    As plaintiff    As defendant
Number of cases
   88 cases    175 cases    83 cases    155 cases
Amount of litigation
   308,848    246,465    413,267    244,767
Allowance for litigations
      5,946       9,277

December 31, 2018

December 31, 2019

As plaintiff

As defendant

As plaintiff

As defendant
Number of cases^(*)
   77 cases    154 cases    119 cases    415 cases
Amount of litigation
   494,645    246,826    291,880    391,362
Provisions for litigations
   17,925    27,029
(*)
The number of lawsuits as of December 31, 2018 and 2019 does not include fraud lawsuits, etc. and those lawsuits that are filed only to extend the statute of limitation.

(4) ~~Other~~
Recently, the FSS announced ‘Results of interim inspection of Lime Asset Management Co., Ltd and future countermeasures’ regarding the deferment of the redemption of Lime Asset Management Co., Ltd. The status of the sale of the Lime Asset Management Co., Ltd. operation deferral fund of the Group is 357.7 billion Won for 1,640 accounts as of the end of December 2019. Currently, a full-time management team is dispatched to monitor the implementation of the normal repurchase and management plan of Lime and proper performance of internal control work.
The Group provides clearance services for payments in Korean Won in order to facilitate trade transactions between Korea and Iran. In connection with these services, the Group is currently being investigated by US government agencies including US prosecutors(United States Attorney’s Office and New York State Attorney General’s Office) as to whether the Group has violated United States laws by participating in prohibited transactions involving countries sanctioned by the US.
(5)
The Group decided to enter into a stock sales agreement with a major shareholder of Woori Asset Trust Co., Ltd (formerly Kukje Asset Trust Co., Ltd) to acquire 44.5% interest (58.6% of voting rights) during July, 2019, and to acquire additional 21.3% interest (28.0% of voting rights) after a certain period. As a result, the Group acquired the interest of the first sales agreement in December 2019 and is planning to acquire the interest of the second sales agreement after a certain period. In regards to this acquisition, the Group recognized 111,242 million as other financial liabilities for the second sales agreement.
~~45.~~41. RELATED PARTY TRANSACTIONS
Related parties of the Group as of December 31, 2018 and 2019, and assets and liabilities recognized, guarantees and commitments, major transactions with ~~the~~ related parties ~~during~~and compensation to key management for the ~~current~~years ended December 31, 2018 and ~~prior periods~~2019 are as follows:

(1)
Related parties

Related parties
Associates
   ~~Kumho Tires Co., Inc.,~~ Woori Service Networks Co., Ltd., Korea Credit Bureau Co., Ltd., Korea Finance Security Co., Ltd., LOTTE CARD Co., Ltd, Chin Hung International Inc., ~~Poonglim Industrial Co., Ltd., STX Engine Co., Ltd, STX Corporation,~~2016KIF-IMM Woori Bank Technology Venture Fund, K BANK Co., Ltd., Well to Sea No. 3 Private Equity Fund, and Others (Dongwoo C & C Co., Ltd. and other 2231 associates)
(2)
Assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):

Related party
Related party

A title of account
   December 31,
2016 December 31,
2017
Related party

A title of account
December 31,
2018 December 31,
2019
Corporation that have significant influence over the Group
   KDIC^(*1)    Loans    9 —
   Other assets    270,041 —
   Deposits due to customers    1,894,631 —
      Other liabilities    15,568 —
Associates

Kumho Tires Co., Inc.
   Loans    299,523 170,917
Woori Service Networks Co., Ltd.
Loans 69 23
      Allowance for credit loss    (715 ) (156,712 ) Loss allowance — (1 )
      Deposits due to customers    45,957 666 Deposits due to customers 1,967 1,881
      Other liabilities    50 50 Accrued expenses — 6

Woori Blackstone Korea Opportunity Private Equity Fund No.1
   Other assets    34 — Other liabilities 333 429
   Other liabilities    306 —
Korea Credit Bureau Co., Ltd.
Loans 7 3
      Deposits due to customers 6,494 26

Woori Service Networks Co., Ltd.
   Loans    29 45 Other liabilities 19 —
   Deposits due to customers    2,572 1,311
Korea Finance Security Co., Ltd.
Loans 57 1,860
      Other liabilities    393 357 Loss allowance (4 ) (3 )

Korea Credit Bureau Co., Ltd.
   Loans    2 6 Deposits due to customers 5,040 1,371
   Deposits due to customers    5,069 5,586 Other liabilities 10 —
   Other liabilities    40 54
Chin Hung International Inc.
Loans 411 244
Loss allowance (204 ) (2 )

Korea Finance Security Co., Ltd.
   Loans    55 56
   Deposits due to customers    2,801 2,854 Deposits due to customers 11,605 5,381
   Other liabilities    6 7 Other liabilities 2,974 321

LOTTE CARD Co. Ltd.
Loans — 7,500

Chin Hung International Inc.
   Loans    4,320 408 Loss allowance — (30 )
   Allowance for credit loss    (4,287 ) (22 )
   Deposits due to customers    14,047 46,220 Deposits due to customers — 2,726
   Other liabilities    279 1,658

K BANK Co., Ltd.
Loans 190 141

Poonglim Industrial Co., Ltd.
   Deposits due to customers    283 4 Account receivables — 24
Other assets — 4

Well to Sea No.3 Private Equity Fund
Loans 1,857 4,490
Loss allowance (9 ) (8 )
Deposits due to customers 356 714
Other liabilities 64 47

Others^(*)
Loans 4,783 84
Loss allowance (324 ) (84 )
Other assets 9 338
Deposits due to customers 8,049 5,577
Other liabilities 165 172
(*)
Others include Saman Corporation,. Woori-ShinyoungGrowth-Cap Private Equity Fund, Uri Hanhwa Eureka Private Equity Fund, Kyesan Engineering Co., Ltd. and DAEA SNC Co., Ltd. etc., as of December 31, 2018 and 2019.

Related party

A title of account
   December 31,
2016 December 31,
2017

STX Engine Co., Ltd.
   Loans    107,974 106,176
      Allowance for credit loss    (89,531 ) (88,734 )
      Deposits due to customers    13,260 18,092
      Other liabilities    588 29

Samho International Co., Ltd.^(*2)
   Loans    37,327 —
      Allowance for credit loss    (717 ) —
      Deposits due to customers    82,917 —
      Other liabilities    216 —

STX Corporation
   Loans    144,035 47,711
      Allowance for credit loss    (92,643 ) (31,210 )
      Deposits due to customers    14,412 77,555
      Other liabilities    90 80

K BANK Co., Ltd.
   Loans    — 212
      Other assets    325 —

Well to Sea No.3 Private Equity Fund^(*3)
   Loans    — 73,810
      Allowance for credit loss    — (39 )
      Deposits due to customers    — 61
      Other liabilities    — 27

Others^(*4)
   Loans    619 499
      Allowance for credit loss    (253 ) (471 )
      Other assets    8 1
      Deposits due to customers    4,460 2,906
      Other liabilities    60 73
(3)
Gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):
   For the years ended
December 31
Related party

A title of account
   2017 2018 2019
Corporation that has significant influence over the Group

KDIC

Interest expenses
   15,331 — —
Associates

Kumho Tire Co., Inc.^(*1)

Interest income
   2,641 1,098 —

Fees income
   5 — —

Interest expenses
   1 — —

Impairment losses due to credit loss (reversal of allowance for credit loss)
   155,997 (156,712 ) —

Woori Blackstone Korea Opportunity Private Equity Fund No.1^(*2)

Fees income
   6,225 — —

Woori Service Networks Co., Ltd.

Other income
   30 30 32

Interest expenses
   24 14 20

Reversal of allowance for credit loss
   — — (3 )

Fees expenses
   543 561 448

Other expenses
   507 580 1,423

Korea Credit Bureau Co., Ltd.

Interest expenses
   82 62 29

Fees expenses
   2,079 2,310 2,608

Korea Finance Security Co., Ltd.

Interest expenses
   12 12 9

Provisions for allowance for credit loss
   — 4 8

Other expenses
   — 146 112

Chin Hung International Inc.

Interest income
   364 — —

Fees income
   1 — —

Interest expenses
   27 43 35

Impairment losses due to credit loss (reversal of allowance for credit loss)
   (4,265 ) 182 44

STX Engine Co., Ltd.^(*3)

Interest income
   1,417 333 —

Fees income
   28 — —

Interest expenses
   147 86 —

Reversal of allowance for credit losses
   (797 ) (88,734 ) —

Samho International Co., Ltd.^(*4)

Interest income
   486 — —

Fees income
   5 — —

Interest expenses
   334 — —

Reversal of allowance for credit losses
   (717 ) — —

STX Corporation^(*3)

Interest income
   219 — —

Fees income
   30 — —

Interest expenses
   4 2 —

Reversal of allowance for credit losses
   (61,432 ) (31,210 ) —

Woori Columbus 1st Private Equity Fund

Fees income
   272 — —
   For the years ended
December 31
Related party

A title of account
   2017    2018 2019

LOTTE CARD Co., Ltd.

Interest income
   —    — 213

Fees income
   —    — 593

Interest expenses
   —    — 53

Provisions for allowance for credit loss
   —    — 30

K BANK Co., Ltd.

Fees income
   —    1,134 1,468

Other income
   1,051    19 —

Well to Sea No.3
Private Equity Fund

Interest income
   982    2,179 1,774

Interest expenses
   4    9 11

Impairment losses due to credit loss (reversal of allowance for credit loss)
   39    (30 ) (18 )

Others^{(*5, 6)}

Interest income
   —    233 —

Fees income
   —    23 1,281

Other income
   —    14 17

Interest expenses
   13    40 55

Impairment losses due to credit loss (reversal of allowance for credit loss)
   218    (147 ) (5 )

(*1) ~~As its ownership interest in the~~
The Group ~~is lower than 20% as of December 31, 2017, it has been excluded from the corporation that have~~lost significant influence over the ~~Group.~~entity due to the termination of the joint management procedures of the creditors’ financial institution during the year ended December 31, 2018, and thus the entity was excluded from the list of associates.
(*2) ~~As the Group sold its entire ownership interest of the~~
The entity it is excluded from the ~~investment in~~list of associates due to its liquidation during the ~~years~~year ended December 31, 2017.
(*3) ~~Due~~
The shares of the entity were sold after it was transferred to ~~capital contribution by the Group~~assets held for distribution (sale) during the ~~years~~year ended December 31, ~~2017,~~2018 and thus was excluded from the ~~entity was included in the investment in~~list of associates.
(*4)
The shares of the entity were sold after it was transferred to assets held for sale during the year ended December 31, 2017 and thus was excluded from the list of associates.
(*5)
Others include Saman Corporation,. Woori-ShinyoungGrowth-Cap Private Equity Fund, Uri Hanhwa Eureka Private Equity Fund,PCC-Woori LP Secondary Fund, Kyesan Engineering Co., Ltd. and DAEA SNC Co., Ltd. etc., as of December 31, 2019.
(*6)
Others as of December 31, 2018 include Saman Corporation, Uri Hanhwa Eureka Private Equity Fund, Kyesan Engineering Co., Ltd, DAEA SNC Co., Ltd. etc. and others as of December 31, 2017 include Saman Corporation, Kyesan Engineering Co., Ltd., Hyunwoo International Co., Ltd., DAEA SNC Co., Ltd. and others ~~as of December 31, 2016 and 2017.~~.
~~(3)~~(4) ~~Gain or loss from~~
Major loan transactions with related parties for the years ended December 31, 2018 and 2019 are as follows (Unit: Korean Won in millions):

For the years ended
December 31
Related party

A title of account
2015 2016 2017
Corporation that have significant influence over the group

KDIC^(*3)

Interest income
22,237 11,778 —

Interest expenses
23,584 20,966 15,331

Impairment losses due to credit loss (reversal of allowance for credit loss)
29 — —
Associates

Kumho Tires Co., Ltd.

Interest income
2,698 2,430 2,641

Fees income
6 6 5

Interest expenses
205 68 1

Impairment losses due to credit loss (reversal of allowance for credit loss)
(2,353 ) 162 155,997

Woori Blackstone Korea Opportunity Private Equity Fund No.1

Fees income
1,437 1,364 6,225

Woori Service Networks Co., Ltd.

Other income
28 29 30

Interest expenses
83 49 24

Fees expenses
821 985 543

Other expenses
228 222 507

Impairment losses due to credit loss
2 — —

Korea Credit Bureau Co., Ltd.

Interest expenses
74 138 82

Fees expenses
1,690 1,915 2,079

Korea Finance Security Co., Ltd.

Interest expenses
39 10 12

Fees expenses
93 110 —

Impairment losses due to credit loss (reversal of allowance for credit loss)
(3 ) — —

Chin Hung International Inc.

Interest income
807 240 364

Fees income
1 1 1

Interest expenses
35 28 27

Reversal of allowance for credit loss
(534 ) (481 ) (4,265 )

Poonglim Industrial Co., Ltd.

Interest expenses
11 2 —

Impairment losses due to credit loss (reversal of allowance for credit loss)
(1,565 ) (1,557 ) —

Ansang Tech Co., Ltd.^(*1)

Reversal of allowance for credit loss
(38 ) — —
STX Engine Co., Ltd. Interest income 1,358 1,348 1,417
Fees income 67 58 28
Interest expenses 46 97 147

Impairment losses due to credit loss
20,524 63,866 (797 )
   For the year ended December 31, 2018
Related parties
Beginning
balance Loan Collection Others Ending
balance^(*1)
Associates
   Kumho Tire Co., Inc.^(*2) 57,470 — 7,057 (50,413 ) —
   Well to Sea No. 3 Private Equity Fund 73,810 16,857 88,810 — 1,857
   STX Engine Co., Ltd. (*3) 39,886 — 2,177 (37,709 ) —
   For the year ended December 31, 2019
Related parties
Beginning
balance Loan Collection Others Ending
balance^(*1)
Associates
   Well to Sea No. 3 Private Equity Fund 1,857 2,633 — — 4,490
   Korea Finance Security Co., Ltd. — 1,800 — — 1,800
   LOTTE CARD Co., Ltd. — 7,500 — — 7,500

For the years ended
December 31
Related party

A title of account
2015 2016 2017
Associates

Samho International Co., Ltd.^(*4)
Interest income 1,015 916 486
Fees income 3 5 5
Interest expenses 981 525 334

Reversal of allowance for credit loss
(2,098 ) (5,166 ) (717 )

Force TEC C Co., Ltd.^(*5)
Interest income 249 153 —

Impairment losses due to credit loss (reversal of allowance for credit loss)
5,900 — —

Hana Engineering & Construction Co., Ltd.^(*2)

Reversal of allowance for credit loss
(98 ) — —
STX Corporation Interest income 1,729 1,039 219
Fees income 89 75 30
Interest expenses 6 7 4

Impairment losses due to credit loss (reversal of allowance for credit loss)
(4,060 ) 73,457 (61,432 )
Osung LST Co., Ltd.^(*2) Interest income 226 170 —
Interest expenses 16 1 —

Reversal of allowance for credit loss
(223 ) (338 ) —

Woori Columbus 1st Private Equity Fund
Fees income 546 308 272

Ilyang Construction Co., Ltd.^(*2)

Impairment losses due to credit loss
215 — —
K BANK Co., Ltd.^(*6) Fees income — 296 —
Other income — 1,638 1,051
Well to Sea No.3 Interest incomes — — 982
Private Equity Fund^(*7) Interest expenses — — 4

Impairment losses due to credit loss
— — 39
Others^(*8) Interest expenses — 17 13

Impairment losses due to credit loss
— 253 218

(*1) ~~As the Group sold its ownership interests in the entities during the year ended December 31, 2015, these entities were~~
Payments that occurred for business reasons among related parties are excluded ~~from the investment in associates.~~and net increase or decrease was used for limited credit loan.
(*2) ~~As the~~
The Group ~~sold its ownership interests in the entities during the year ended December 31, 2016, these entities were excluded from the investment in associates.~~
~~(*3)~~ ~~As its ownership interest in the Group is lower than 20% as of December 31, 2017, it has been exclude from the corporation that have significant influence over the Group.~~
~~(*4)~~ ~~As the Group sold its entire ownership interest of the entity, it is excluded from the investment in associates during the years ended December 31, 2017.~~
~~(*5)~~ ~~The entity is not in scope for the associates as of December 31, 2017, because the Group does not have~~lost significant influence over the entity due to the ~~fact that it is going through workout process under receivership.~~
~~(*6)~~ ~~Due to capital contribution~~termination of the joint management procedures of the creditors’ financial institution during the year ended December 31, ~~2016,~~2018, and thus the entity ~~has been included in~~was excluded from the ~~investment in~~list of associates.
(*7)3) ~~Due~~
The shares of the entity were sold after it was transferred to ~~capital contribution by the Group~~assets held for distribution (sale) during the year ended December 31, ~~2017,~~2018 and thus was excluded from the ~~entity was included in the investment in~~list of associates.
~~(*8)~~ Others include Saman Corporation, Kyesan Engineering Co., Ltd., Hyunwoo International Co., Ltd., DAEA SNC Co., Ltd. and others as of December 31, 2017, and Saman Corporation, Kyesan Engineering Co., Ltd., Gachi Staff Co., Ltd., QTS Shipping Co., Ltd., and others were included as of December 31, 2016, respectively.

~~(4)~~(5)
Details of changes in major deposits due to customers with related parties for the years ended December 31, 2018 and 2019 are as follows (Unit: Korean Won in millions):
      For the year ended December 31, 2018
Related parties
   Beginning
balance    Borrowings    Repayment
and others    Ending
balance^(*1)
Associates
   Saman Corporation    2,334    102    —    2,436
   Woori Service Networks Co., Ltd    1,135    1,025    980    1,180
   Chin Hung International Inc    765    765    765    765
.
   Korea Credit Bureau Co., Ltd.    4,000    12,000    10,000    6,000
   Partner One Value Up I Private Equity Fund    —    1,803    400    1,403
   Korea Finance Security Co., Ltd.    635    560    660    535
   STX Corporation^(*2)    330    —    330    —
   STX Engine Co., Ltd.^(*2)    10,256    —    10,256    —
   Kumho Tire Co., Inc.^(*2)    37    —    37    —
   Hyunwoo International Co., Ltd.^(*2)    41    —    41    —
      For the year ended December 31, 2019
Related parties
   Beginning
balance    Borrowings    Repayment
and others    Ending
balance^(*1)
Associates
   Saman Corporation    2,436    86    —    2,522
   Woori Service Networks Co., Ltd    1,180    1,460    1,460    1,180
   Chin Hung International Inc    765    400    765    400
.
   Korea Credit Bureau Co., Ltd.    6,000    —    6,000    —
   Partner One Value Up I Private Equity Fund    1,403    1,617    1,870    1,150
   Korea Finance Security Co., Ltd.    535    25    560    —
(*1)
Details of payment between related parties and demand deposit due to customers etc. are excluded.
(*2)
Excluded from associates due to disposal during the previous year.
(6)
There are no major borrowing transactions with related parties for the years ended December 31, 2018 and 2019.
(7)
Guarantees provided to the related parties are as follows (Unit: Korean Won in millions):

   December 31, 2016    December 31, 2017
KDIC^(*1)
   1,500,000    —    Loan commitment
Kumho Tires Co., Inc.
   24,187    4,181    Letter of credit and others
   126,435    636    Loan commitment
Korea Finance Security Co., Ltd.
   205    204    Loan commitment
Korea Credit Bureau Co., Ltd.
   33    29    Loan commitment
Woori Service Networks Co., Ltd.
   171    155    Loan commitment
Chin Hung International Inc.
   40,904    31,891    Loan commitment
STX Engine Co., Ltd.
   63,103    68,858    Letter of credit and others
   685    —    Loan commitment
SamHo Co., Ltd.^(*2)
   30,083    —    Loan commitment
STX corporation
   24,316    17,557    Letter of credit and others
   71    53    Loan commitment
Well to Sea No.3 Private Equity Fund^(*3)
   —    236,190    Loan commitment
   December 31, 2018    December 31, 2019
Warranty
Korea Finance Security Co., Ltd.
   203    400    Unused loan commitment
Korea Credit Bureau Co., Ltd.
   28    32    Unused loan commitment
Woori Service Networks Co., Ltd.
   131    177    Unused loan commitment
Chin Hung International Inc.
   32,058    32,055    Unused loan commitment
K BANK Co., Ltd.
   15    159    Unused loan commitment
Well to Sea No.3 Private Equity Fund
   208,143    210,510    Unused loan commitment
LOTTE CARD Co. Ltd.
   —    150,000    Unused loan commitment
~~(*1)~~ ~~As its ownership interest in the Group is lower than 20% as of December 31, 2017, it has been exclude from the corporation that have significant influence over the Group.~~
~~(*2)~~ ~~As the Group sold its entire ownership interest of the entities during the year ended December 31, 2017, they are excluded from the investment in associates.~~
~~(*3)~~ ~~Due to capital contribution by the Group during the year ended December 31, 2017, the entity was included in the investment in associates.~~
~~For the guarantee~~There no recognized provisions for guarantees provided to the related parties ~~the Group recognized provisions for guarantees amounting to 70,587 million Won and 71,459 million Won,~~ as of December 31, ~~2016~~2018 and ~~2017,~~2019, respectively.

~~(5)~~(8)
Amount of derivatives-related commitments with the related parties
   For the years ended December 31
Warrantee
   2018            2019                Warranty
Well to Sea No.3 Private Equity Fund
   439,243    584,377    Open interest
(9)
Compensation for key management is as follows (Unit: Korean Won in millions):

   For the years ended December 31
       2015(*)            2016            2017
Short term benefits
   10,288    9,523    12,024
Severance payments
   473    424    472






Total
   10,761    9,947    12,496






~~(*)~~ ~~As the scope of the compensation for key management disclosure has changed, the comparative amounts are restated.~~
   For the years ended December 31
       2017            2018            2019
Short-term employee salaries
   12,024    12,326    13,427
Retirement benefit service costs
   472    489    783
Share-based compensation
   —    —    2,494






Total
   12,496    12,815    16,704






Key management includes registered executives andnon-registered executives. Outstanding assets ~~and liabilities~~ from transactions with key management amount to ~~2,439~~2,816 million Won and ~~6,309~~2,414 million Won, ~~respectively,~~ as of December 31, ~~2017. With~~2018 and 2019 respectively and with respect to the assets, the Group has not recognized any allowance nor ~~provision.~~related impairment loss due to credit losses. Also, liabilities from transaction with key management amount to 6,096 million Won and 6,543 million Won, respectively, as of December 31, 2018 and 2019.
~~46.~~42. RESTRUCTURING OF THE GOVERNANCE STRUCTURE OF THE GROUP
(1)
Establishment of the Group
On November 7, 2018, Woori Bank, a subsidiary of the parent company, obtained approval from the Financial Services Commission for the establishment of a holding company, and Woori Bank, held an extraordinary general meeting of shareholders on December 28, 2018 to approve the comprehensive transfer of six companies’ shares of Woori Bank and its subsidiaries, Woori Finance Management Research Institute, Woori FIS Co., Ltd., Woori Fund Services Inc., Woori Credit Information Co. and Woori Private Equity Asset Management Co. to establish the financial holding company. As a result, Woori Bank and its subsidiaries, Woori Finance Research Institute Co., Ltd., Woori FIS Co., Ltd., Woori Fund Services Inc., Woori Credit Information Co., Ltd., and Woori Private Equity Asset Management Co., Ltd. were transferred as wholly-owned subsidiaries to the Group. The Group’s common stocks were listed on the Korea Exchange on February 13, 2019 and its American Depositary Shares (ADSs) are being traded as the underlying common stock on the New York Stock Exchange since the same date.
(2)
Accounting treatment of the Group
From the perspective of the Group, the establishment of the parent company in a comprehensive share transfer of the controlling, subordinate or subsidiary to restructure the governance under the same control is a transaction that lacks commercial substance with no change in the assets and liabilities of the subsidiary, with no significant change in the existing owners’ absolute and relative interest in the Group net assets. Therefore, the Group accounted for the governance restructuring as it saw the consolidation entity continuing and presented the consolidated financial statements and notes in comparison. Consolidated financial statements in the comparative period are consolidated financial statements of Woori Bank and its subsidiaries (before the scheduled sale classification of five subsidiaries excluding Woori Bank) and consolidated financial statements in the first (current) period are consolidated financial statements of the parent and its subsidiaries, including Woori Bank.
43. LEASES
(1)
The future lease payments under the lease contracts are as follows (Unit: Korean Won in millions):
December 31, 2019
Lease payments
Within one year
161,251
After one year but within five years
232,985
After five years
40,698
Total
434,934
(2)
Total cash outflows from lease are as follows (Unit: Korean Won in millions):
For the year
ended
December 31,
2019
Cash outflows from lease
217,867
(3)
Details of lease payments that are not included in the measurement of lease liabilities due to the fact that they are short-term leases or leases for which the underlying asset is of low value are as follows (Unit: Korean Won in millions):
For the years
ended
December 31
Lease payments for short-term leases
1,964
Lease payments for which the underlying asset is of low value
332
Total
2,296
44. BUSINESS COMBINATION

(1) ~~Acquisition of Woori Wealth Bank in Philippines in 2016~~
General
~~The~~As of August 1, 2019, the Group acquired ~~51% interest ownership~~73% interests in ~~Wealth Development Bank, a savings bank in Philippines, in October 2016.~~Tong Yang Asset Management Co., Ltd. and changed the name of Tong Yang Asset Management Co., Ltd. to Woori Asset Management Corp. As ~~the residual shares~~ of ~~49% is owned by Viscal group, which operates retail businesses,~~August 1, 2019, the Group ~~plans~~obtained control of 100% of ABL Global Asset Management Co., Ltd. and transferred it as a subsidiary as of December 6, 2019, and changed its name to ~~expand its~~Woori Global Asset Management Co., Ltd.. As of December 30, 2019, the Group acquired 67.2% interests (including 8.6% interest that Woori Bank held) in the Kukje Asset Trust Co., Ltd. and changed the name Woori Asset Trust Co., Ltd.. The main reasons for the business ~~operation through retail channels~~combination are to maximize synergy between the consolidated subsidiaries and to strengthen thenon-bank business portfolio.
The operating and net income of ~~Viscal group.~~Woori Asset Management Corp., reflected in the consolidated statement of comprehensive income for the five months after the acquisition date, are 2,365 million Won and 1,720 million Won, respectively, and the operating and net loss of Woori Global Asset Management Co., Ltd. are 1,751 million Won and 1,360 million Won, respectively. Assuming that the acquisition of Woori Asset Management Corp., Woori Global Asset Management Co., Ltd. and Woori Asset Trust Co., Ltd. was settled on January 1, 2019, the starting date of the annual reporting period, the operating and net profit of Woori Asset Management Corp. would be 10,572 and 7,976 million Won, respectively, the operating and net losses of Woori Global Asset Management Co., Ltd. would be 3,711 million and 2,774 million Won, respectively, and the operating and net profit of Woori Asset Trust Co., Ltd. would be 41,154 million and 30,981 million Won.
(2) ~~Establishment of Woori Bank Vietnam Limited in 2016~~
Identifiable net assets
~~The Group established Woori Bank Vietnam (capitalized at 3 trillion VND) in October 2016, upon the approval from Vietnam Central Bank~~Identified assets and ~~commenced its operation on January 3, 2017. The Group has been operating two branches in Hanoi and Ho Chi Minh, and newly established the subsidiary in order for further expansion~~liabilities as of ~~its retail banking business in Vietnam.~~
~~(3) Acquisition accounting in 2016~~December 31, 2019 are as follows (Unit: Korean Won in millions):

   Woori Wealth Bank
in Philippines    Woori Bank Vietnam
Limited    Total
I. Consideration

Cash and cash equivalents
   25,675    155,400    181,075






II. Identifiable assets and liabilities

Cash and Cash equivalents
   48,774    —    48,774
AFS financial assets
   2,125    —    2,125
Loan and receivables
   126,917    155,400    282,317
Property and equipment
   651    —    651
Intangible assets
   205    —    205
Other assets
   8,792    —    8,792






Sub-total
   187,464    155,400    342,864






Deposits
   148,521    —    148,521
Allowance for credit losses
   352    —    352
Other liabilities
   3,655    —    3,655






Sub-total
   152,528    —    152,528






Fair value of identifiable net asset
   34,936    155,400    190,336






III.Non-controlling interest
   17,118    —    17,118
IV. Goodwill
   7,857    —    7,857

Accounts
   Woori Asset
Management Corp.    Woori Global Asset
Management Co.,
Ltd.    Woori Asset Trust
Co., Ltd.
Assets

Cash and cash equivalent
   12,914    2,318    67,555

Financial assets at FVTPL
   49,446    2,470    654

Financial assets at FVTOCI
   26,393    —    —

Financial assets at amortized cost^{(*1) (*3)}
   16,739    25,612    61,792

Premises and equipment
   1,610    2,145    3,983

Intangible assets^(*2)
   6,667    264    39,577

Deferred tax assets
   1,547    1,551    1,524

Others
   63    60    1,828






   Sub-total    115,379    34,420    176,913






Liabilities
   Financial liabilities    5,129    3,329    12,180

Provision liabilities
   221    108    3,820

Deferred tax liabilities
   1,085    13    8,971

Others
   159    —    29,410






   Sub-total    6,594    3,450    54,381






Fair value of net identifiable assets
   108,785    30,970    122,532






~~47. SUBSEQUENT EVENTS~~
(*1)
The acquired financial assets at amortized cost were estimated at fair value. The contractual total of the financial assets at amortized cost of Woori Asset Management Corp. is 18,680 million Won, and the contractual cash flows that are not expected to be recovered as of the acquisition date are 1,941 million Won. Woori Global Asset Management Co., Ltd. has a contractual total of 25,612 million Won for financial assets at amortized cost. The contractual total of Woori Asset Trust Co., Ltd.’s financial assets at amortized cost are 72,686 million Won and will be recovered as of the acquisition date. Unexpected contractual cash flow is 10,894 million Won.
(*2)
The intangible assets of Woori Asset Management Corp. and Woori Asset Trust Co., Ltd. each include 6,456 million Won in customer relationships and 37,074 million Won in order backlog as a result of business combination and were valued at fair value through the Multi-Period Over-Return Act (MEEM) as they were judged separately identifiable intangible assets. A multi-term excess profit method is a method to estimate the future cash flows generated by each intangible asset and to discount the cash flows generated purely by that intangible asset to its present value by deducting the portion of the asset’s contribution to that cash flow generation.
(*3)
The Group has set 100% loan loss allowance fornon-collected accrued income related with management fees of Woori Asset Management Corp. In addition, although the fund investors have filed a lawsuit seeking compensation for damages, this financial effect was not reflected in the consolidated financial statements as of the end of the current term because the possibility and extent of loss cannot be measured reliably at the end of the current term.
If, within one year of the acquisition date, new information obtained about the facts and circumstances that existed at the acquisition date requires the adjustment of the amounts recognized at the acquisition date, or the recognition of additional provisions existing at the acquisition date, the accounting for the business combination will be adjusted.
~~There have been no significant events between December 31, 2017~~
(3)
Goodwill
Recognized goodwill as a result of business combination are as follows (Unit: Korean Won in million):
   Woori Asset
Management Corp.    Woori Global Asset
Management Co., Ltd.    Woori Asset Trust
Co., Ltd.
Transfer price
   122,450    33,000    224,150
Fair value of identifiable net asset
   108,785    30,970    122,532
Non-controlling interest^(*)
   29,371    —    40,162
Goodwill
   43,036    2,030    141,780
(*)
Thenon-controlling interest in Woori Asset Management Corp. and Woori Asset Trust Co., Ltd. acquired during the year ended December 31, 2019, was measured as the proportion of thenon-controlling interest in the acquiree’s identifiable net assets.
In the event of a business combination, the consideration transferred includes the premium paid to acquire Woori Asset Management Corp., Woori Global Asset Management Co., Ltd. and Woori Asset Trust Co., Ltd. which results in goodwill. In addition, the consideration paid for the business combination includes expected synergies, revenue growth, and the ~~date~~amount related to future market growth. However, these benefits through Woori Global Asset Management Co., Ltd. did not meet the identifiable intangible asset recognition requirements and were not recognized separately from goodwill.
The Group also acquired a relationship with a customer of ~~issuance~~Woori Asset Management Corp. and order backlog of ~~these~~Woori Asset Trust Co., Ltd. as part of the acquisition. These relationships with customers were recognized separately from goodwill because they met the reparability criteria to meet the recognition requirements for intangible assets.
(4)
Business combination cost
The Group incurred 2,634 million Won, including legal fees and due diligence fees, in relation to the business combination, and the amount was recognized as a fee expense in the consolidated statement of comprehensive income of the Group.
(5)
Net cash outflow due to business combination
Details of net cash outflows due to business combination are as follows (Unit: Korean Won in million):
   Woori Asset
Management Corp.    Woori Global Asset
Management Co., Ltd.    Woori Asset Trust
Co., Ltd.
Consideration paid in cash
   122,450    33,000    224,150
Acquired cash and cash equivalents
   12,914    2,318    67,555






Deduction in total
   109,536    30,682    156,595






45. EVENTS AFTER THE REPORTING PERIOD
The Coronavirus disease(COVID-19) outbreak in January, 2020 is having a negative impacts on the global economy, including Korea. As a result, the macroeconomic environment is unstable overall. The Group is closely monitoring the situation; however, the impact on the Group due to the Coronavirus cannot be estimated as of the financial statements ~~which would require a change~~approval for the issuance date. The impact on GDP and other key indicators will be considered when determining the severity and likelihood of downside economic scenarios that will be used to ~~or additional disclosure~~estimate ECL under IFRS 9 in ~~the accounts.~~2020.

~~F-126~~F-175


Title of each class	Trading symbol	Name of each exchange on which registered
American Depositary Shares, each representing three shares of Common Stock	WF	New York Stock Exchange
Common Stock, par value￦5,000 per share	WF	New York Stock Exchange*


☒ Large accelerated filer		☐ Accelerated Filer		☐ Non-accelerated filer		☐ Emerging growth company


			Page
Presentation of Financial and Other Information				1
Forward-Looking Statements				2
Item 1.	Identity of Directors, Senior Management and Advisers			3
Item 2.	Offer Statistics and Expected Timetable			3
Item 3.	Key Information			3
	Item 3.A.	Selected Financial Data		3
	Item 3.B.	Capitalization and Indebtedness		10
	Item 3.C.	Reasons for the Offer and Use of Proceeds		10
	Item 3.D.	Risk Factors		10
Item 4.	Information on the Company			3437
	Item 4.A.	History and Development of the Company		3437
	Item 4.B.	Business Overview		4044
	Item 4.C.	Organizational Structure		~~107~~119
	Item 4.D.	Property, Plants and Equipment		~~108~~120
Item 4A.	Unresolved Staff Comments			~~108~~120
Item 5.	Operating and Financial Review and Prospects			~~109~~120
	Item 5.A.	Operating Results		~~109~~120
	Item 5.B.	Liquidity and Capital Resources		~~140~~149
	Item 5.C.	Research and Development, Patents and Licenses, etc.		~~146~~
	~~Item 5.D.~~	~~Trend Information~~		~~146~~
	~~Item 5.E.~~	~~Off-Balance Sheet Arrangements~~		~~146~~
	~~Item 5.F.~~	~~Tabular Disclosure of Contractual Obligations~~		~~146~~
	~~Item 5.G.~~	~~Safe Harbor~~		~~146~~
~~Item 6.~~	~~Directors, Senior Management and Employees~~			~~146~~
	~~Item 6.A.~~	~~Directors and Senior Management~~		~~146~~
	~~Item 6.B.~~	~~Compensation~~		~~151~~
	~~Item 6.C.~~	~~Board Practices~~		~~151~~
	~~Item 6.D.~~	~~Employees~~		~~153~~
	~~Item 6.E.~~	~~Share Ownership~~		~~154~~
~~Item 7.~~	~~Major Shareholders and Related Party Transactions~~			155
	Item ~~7.A.~~5.D.	~~Major Shareholders~~Trend Information		155
	Item ~~7.B.~~5.E.	~~Related Party Transactions~~Off-Balance Sheet Arrangements		155
	Item 5.F.	Tabular Disclosure of Contractual Obligations		156
	Item ~~7.C.~~5.G.	~~Interest of Experts and Counsel~~Safe Harbor		156
Item 8.6.	~~Financial Information~~Directors, Senior Management and Employees			156
	Item ~~8.A.~~6.A.	~~Consolidated Statements~~Directors and ~~Other Financial Information~~Senior Management		156
	Item ~~8.B.~~6.B.	~~Significant Changes~~Compensation		~~157~~
~~Item 9.~~	~~The Offer and Listing~~			~~157~~160
	Item ~~9.A.~~6.C.	~~Offering and Listing Details~~Board Practices		~~157~~160
	Item ~~9.B.~~6.D.	~~Plan of Distribution~~Employees		~~158~~162
	Item ~~9.C.~~6.E.	~~Markets~~Share Ownership		~~158~~163
Item 7.	Major Shareholders and Related Party Transactions			164
	Item ~~9.D.~~7.A.	~~Selling~~Major Shareholders		164
	Item 7.B.	Related Party Transactions		165
	Item ~~9.E.~~7.C.	~~Dilution~~Interest of Experts and Counsel		165
Item 8.	Financial Information			165
	Item ~~9.F.~~8.A.	Consolidated Statements and Other Financial Information		165
	Item 8.B.	Significant Changes		167
Item 9.	The Offer and Listing			167
	Item 9.A.	Offering and Listing Details		167
	Item 9.B.	Plan of Distribution		170
	Item 9.C.	Markets		170
	Item 9.D.	Selling Shareholders		170
	Item 9.E.	Dilution		170
	Item 9.F.	Expenses of the Issuer		~~165~~170
Item 10.	Additional Information			~~166~~171
	Item 10.A.	Share Capital		~~166~~171
	Item 10.B.	Memorandum and Articles of Association		~~166~~171
	Item 10.C.	Material Contracts		~~172~~177
	Item 10.D.	Exchange Controls		~~173~~177
	Item 10.E.	Taxation		~~174~~178


	Won per U.S. dollar (noon buying rate)
	Low		High		Average⁽¹⁾		Period-End
2013		1,050.1		1,161.3		1,094.7		1,055.3
2014		1,008.9		1,117.7		1,052.3		1,090.9
2015		1,063.0		1,196.4		1,131.0		1,169.3
2016		1,090.0		1,242.6		1,159.3		1,203.7
2017		1,067.4		1,207.2		1,129.0		1,067.4
October		1,115.7		1,146.2		1,130.9		1,115.7
November		1,079.3		1,120.0		1,099.8		1,084.8
December		1,067.4		1,094.6		1,082.9		1,067.4
2018 (through April 20)		1,054.6		1,093.0		1,070.0		1,071.0
January		1,057.6		1,073.6		1,065.6		1,068.3
February		1,065.3		1,093.0		1,078.5		1,082.1
March		1,060.3		1,081.3		1,069.9		1,061.0
April (through April 20)		1,054.6		1,071.6		1,065.2		1,071.0


Demand Deposits	Time Deposits	Savings Deposits	Installment Deposits	Certificates of Deposit	Time Deposits	Savings Deposits	Installment Deposits	Certificates of Deposit
10.08%	52.34%	35.68%	0.01%	1.89%
8.62%					54.97%	36.04%	0.01%	0.36%


			Page
	Item 10.F.	Dividends and Paying Agents		~~179~~184
	Item 10.G.	Statements by Experts		~~179~~184
	Item 10.H.	Documents on Display		~~179~~184
	Item 10.I.	Subsidiary Information		~~179~~184
Item 11.	Quantitative and Qualitative Disclosures about Market Risk			~~180~~185
Item 12.	Description of Securities Other Than Equity Securities			~~202~~207
Item 13.	Defaults, Dividend Arrearages and Delinquencies			~~203~~208
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds			~~203~~208
Item 15.	Controls and Procedures			~~203~~208
Item 16.	Reserved			~~204~~209
Item 16A.	Audit Committee Financial Expert			~~204~~209
Item 16B.	Code of Ethics			~~204~~210
Item 16C.	Principal Accountant Fees and Services			~~204~~210
Item 16D.	Exemptions from the Listing Standards for Audit Committees			~~205~~210
Item 16E.	Purchase of Equity Securities by the Issuer and Affiliated Purchasers			~~205~~211
Item 16F.	Change in Registrant’s Certifying Accountant			~~205~~211
Item 16G.	Corporate Governance			~~205~~212
Item 16H.	Mine Safety Disclosure			~~207~~213
Item 17.	Financial Statements			~~207~~213
Item 18.	Financial Statements			~~207~~213
Item 19.	Exhibits			~~208~~213


	Year ended December 31,															Year ended December 31,
	2013^(a)			2014^(a)			2015			2016			2017			2015			2016			2017			2018		2019
	(in billions of Won)															(in billions of Won)
Interest income	￦	9,493		￦	9,211		￦	8,698		￦	8,512		￦	8,551		￦	8,698		￦	8,512		￦	8,551		￦	9,684	￦	10,577
Fees and commissions income		1,565			1,598			1,757			1,865			2,069			1,757			1,865			2,069			1,681		1,709
Dividend income		88			97			103			185			125			103			185			125			91		108
Net gain (loss) on financial assets at fair value through profit or loss		124			190			240			114			(105	)
Net gain on financial instruments at fair value through profit or loss (IFRS 9)																	—			—			—			214		25
Net gain (loss) on financial instruments at fair value through profit or loss (IAS 39)																	240			114			(105	)		—		—
Net gain on financial assets at fair value through other comprehensive income																	—			—			—			2		11
Net gain (loss) on available-for-sale financial assets		(85	)		(69	)		(3	)		(1	)		193			(3	)		(1	)		193			—		—
Net gain arising on financial assets at amortized cost																	—			—			—			80		102

Total revenue	￦	11,185		￦	11,027		￦	10,795		￦	10,675		￦	10,833		￦	10,795		￦	10,675		￦	10,833		￦	11,752	￦	12,532


	2016 vs. 2015 Increase/(decrease) due to changes in									2017 vs. 2016 Increase/(decrease) due to changes in									2018 vs. 2017 Increase/(decrease) due to changes in									2019 vs. 2018 Increase/(decrease) due to changes in
	Volume			Rate			Total			Volume			Rate			Total			Volume			Rate			Total			Volume			Rate			Total
	(in billions of Won)																		(in billions of Won)
Interest-earning assets
Due from banks	￦	15		￦	(21	)	￦	(6	)	￦	4		￦	4		￦	8		￦	2		￦	28		￦	30		￦	—		￦	28		￦	28
Loans⁽¹⁾
Commercial and industrial		109			(391	)		(282	)		(94	)		15			(79	)		293			3			296			199			(32	)		167
Trade financing		(9	)		22			13			(16	)		43			27			(5	)		80			75			(21	)		1			(20	)
Lease financing⁽²⁾		—			—			—			1			—			1			3			—			3			3			(5	)		(2	)
Other commercial		(5	)		(15	)		(20	)		(14	)		4			(10	)		46			13			59			(39	)		12			(27	)
General purpose household⁽³⁾		106			(142	)		(36	)		154			22			176			21			339			360			173			108			281
Mortgage		328			(118	)		210			75			7			82			27			127			154			156			2			158
Credit cards		67			(17	)		50			41			(37	)		4			55			(6	)		49			(7	)		62			55
Securities
Trading(4)		8			(8	)		—			1			(11	)		(10	)		24			(23	)		1			2			(5	)		(3	)
Investment⁽⁴⁾⁽⁵⁾		50			(158	)		(108	)		34			(186	)		(152	)		(8	)		117			109			227			27			254
Other		2			(9	)		(7	)		—			(8	)		(8	)		2			(5	)		(3	)		2			—			2

Total interest income	￦	671		￦	(857	)	￦	(186	)	￦	186		￦	(147	)	￦	39		￦	460		￦	673		￦	1,133		￦	695		￦	198		￦	893

Interest-bearing liabilities
Deposits due to customers
Demand deposits	￦	7		￦	26		￦	33		￦	(11	)	￦	(13	)	￦	(24	)	￦	1		￦	(2	)	￦	(1	)	￦	(2	)	￦	(14	)	￦	(16	)
Time and savings deposits		197			(604	)		(407	)		62			(220	)		(158	)		114			296			410			184			212			396
Certificates of deposit		30			(7	)		23			18			1			19			9			17			26			(7	)		8			1
Other deposits		50			(40	)		10			11			(15	)		(4	)		18			84			102			35			92			127
Borrowings		(2	)		—			(2	)		(26	)		49			23			(26	)		95			69			68			8			76
Debentures		(7	)		(82	)		(89	)		77			(57	)		20			43			38			81			50			7			57
Other		5			(17	)		(12	)		(5	)		(33	)		(38	)		4			12			16			6			3			9

Total interest expense	￦	280		￦	(724	)	￦	(444	)	￦	126		￦	(288	)	￦	(162	)	￦	163		￦	540		￦	703		￦	334		￦	316		￦	650

Net interest income	￦	391		￦	(133	)	￦	258		￦	60		￦	141		￦	201		￦	297		￦	133		￦	430		￦	361		￦	(118	)	￦	243


	Total					Total
	Number		% of Total			Number		% of Total
Area
Seoul		402		46	%		396		45.3	%
Six largest cities (other than Seoul)		150		17			150		17.2
Other		324		37			328		37.5

Total		876		100	%		874		100	%


	As of or for the year ended December 31,									As of or for the year ended December 31,
	2015			2016			2017			2017			2018			2019
	(in billions of Won, unless indicated otherwise)									(in billions of Won, unless indicated otherwise)
Number of credit card holders (at year end) (thousands of holders)
General accounts		11,789			12,125			12,509			12,509			12,525			13,000
Corporate accounts		642			481			550			550			460			555

Total		12,431			12,606			13,059			13,059			12,985			13,555

Active ratio⁽¹⁾		47.20	%		49.00	%		50.70	%		50.70	%		52.73	%		55.00	%
Credit card interest and fees
Installment and cash advance interest	￦	223		￦	236		￦	225		￦	225		￦	224		￦	243
Annual membership fees		43			56			72			72			78			86
Merchant fees		763			831			896			896			943			918
Other fees		343			421			570			570			606			640

Total	￦	1,372		￦	1,544		￦	1,763		￦	1,763		￦	1,851		￦	1,885

Charge volumes
General purchase	￦	50,761		￦	59,678		￦	58,454		￦	61,175		￦	58,952		￦	64,762
Installment purchase		5,454			6,231			6,796			6,796			8,201			7,912
Cash advance		4,404			4,620			4,700			4,700			4,859			4,862
Card loan		2,984			2,991			2,944			2,944			3,306			3,664

Total	￦	63,603		￦	73,520		￦	72,894		￦	75,615		￦	75,318		￦	81,200

Outstanding balances (at year end)
General purchase	￦	2,275		￦	2,580		￦	2,595		￦	2,595		￦	3,057		￦	3,243
Installment purchase		1,315			1,383			1,559			1,559			2,089			1,969
Cash advance		565			573			574			574			607			585
Card loan		1,951			2,146			2,107			2,107			2,305			2,611

Total	￦	6,106		￦	6,682		￦	6,835		￦	6,835		￦	8,058		￦	8,408

Average outstanding balances
General purchase	￦	2,299		￦	2,591		￦	2,822		￦	2,822		￦	3,036		￦	3,292
Installment purchase		1,208			1,375			1,520			1,520			1,911			2,046
Cash advance		558			576			581			581			596			591
Card loan		1,748			2,047			2,174			2,174			2,391			2,567

Total	￦	5,813		￦	6,589		￦	7,097		￦	7,097		￦	7,934		￦	8,496

Delinquency ratios⁽²⁾
Less than 1 month		1.68			1.37			1.78			1.78			1.53			1.19
From 1 month to 3 months		0.83			0.76			0.72			0.72			0.72			0.65
From 3 months to 6 months		0.76			0.44			0.57			0.57			0.64			0.65
Over 6 months		0.00			0.00			0.00			0.00			0.00			0.00

Total		3.27	%		2.57	%		3.07	%		3.07	%		2.89	%		2.49	%

Non-performing loan ratio⁽³⁾		1.12	%		0.76	%		0.83	%		0.83	%		0.87	%		0.87	%
Gross charge-offs	￦	198		￦	242		￦	228		￦	228		￦	242		￦	281
Recoveries		34			44			51			51			57			60

Net charge-offs	￦	164		￦	198		￦	177		￦	177		￦	185		￦	221

Gross charge-off ratio⁽⁴⁾		3.41	%		3.66	%		3.22	%		3.22	%		3.04	%		3.31	%
Net charge-off ratio⁽⁵⁾		2.82	%		3.00	%		2.49	%		2.49	%		2.33	%		2.61	%


	As of December 31, 2015
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(in billions of Won)
Available-for-sale financial assets:
Debt securities
Korean treasury and government agencies	￦	3,530	￦	29	￦	—		￦	3,559
Financial institutions		5,599		27		—			5,626
Corporate		3,809		79		—			3,888
Asset-backed securities		260		—		(2	)		258
Foreign currency bonds		650		1		(13	)		638
Others		12		8		—			20

Subtotal		13,860		144		(15	)		13,989
Equity securities		968		376		(6	)		1,338
Beneficiary certificates⁽¹⁾		1,119		24		(25	)		1,118
Others		723		3		—			726

Total available-for-sale financial assets	￦	16,670	￦	547	￦	(46	)	￦	17,171

Held-to-maturity financial assets:
Debt securities
Korean treasury and government agencies	￦	3,367	￦	64	￦	—		￦	3,431
Financial institutions		4,138		26		—			4,164
Corporate		6,021		107		(5	)		6,123
Foreign currency bonds		96		—		—			96

Total held-to-maturity financial assets	￦	13,622	￦	197	￦	(5	)	￦	13,814


	As of December 31, 2016
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(in billions of Won)
Available-for-sale financial assets:
Debt securities
Korean treasury and government agencies	￦	3,779	￦	14	￦	(4	)	￦	3,789
Financial institutions		6,311		7		(4	)		6,314
Corporate		4,336		94		(21	)		4,409
Asset-backed securities		250		—		(1	)		249
Foreign currency bonds		1,227		1		(16	)		1,212
Others		73		2		—			75

Subtotal		15,976		118		(46	)		16,048
Equity securities		1,034		420		—			1,454
Beneficiary certificates⁽¹⁾		2,803		40		(21	)		2,822
Others		494		3		(3	)		494

Total available-for-sale financial assets	￦	20,307	￦	581	￦	(70	)	￦	20,818

Held-to-maturity financial assets:
Debt securities
Korean treasury and government agencies	￦	3,754	￦	27	￦	(7	)	￦	3,774
Financial institutions		5,169		9		(5	)		5,173
Corporate		4,823		58		(7	)		4,874
Foreign currency bonds		164		—		—			164

Total held-to-maturity financial assets	￦	13,910	￦	94	￦	(19	)	￦	13,985


Business Unit⁽¹⁾		Location
Subsidiaries:
Woori America Bank		United States
PT Bank Woori Saudara Indonesia 1906, Tbk		Indonesia
Woori Global Markets Asia Limited		China (Hong Kong)
Woori Bank (China) Limited		China
AO Woori Bank		Russia
Banco Woori Bank do Brasil S.A.		Brazil
Woori Finance ~~Cambodia~~		~~Cambodia~~
~~Woori Finance~~ Myanmar Co., Ltd.		Myanmar
Wealth Development Bank ~~Corp.~~Corporation		Philippines
Woori Bank Vietnam Limited		Vietnam
WB Finance Co., Ltd.⁽²⁾		Cambodia
Woori Finance (Cambodia) Plc.⁽²⁾		Cambodia
Woori Bank Europe GmbH		Germany
Branches, Agencies and Representative Offices:
London Branch		United Kingdom
Tokyo Branch		Japan
Singapore Branch		Singapore
Hong Kong Branch		China (Hong Kong)
Bahrain Branch		Bahrain
Dhaka Branch		Bangladesh
Gaeseong Branch⁽³⁾		Korea⁽²⁾⁽³⁾
New York Agency		United States
Los Angeles Branch		United States
Chennai Branch		India
Sydney Branch		Australia
Dubai Branch		United Arab Emirates
Gurgaon Branch		India
Mumbai Branch		India
Kuala Lumpur Representative Office		Malaysia
Yangon Representative Office		Myanmar
Iran Representative Office⁽⁴⁾		Iran⁽⁴⁾
Katowice Representative Office		Poland


	As of December 31,
	2019⁽¹⁾
	(in billions of Won)
Securities funds	￦	24,003
Real estate funds		92
Special asset funds		951
Mixed asset funds		15
Money market funds		3,416

Total	￦	28,477


	Loans																Loans								Guarantees and acceptances											Amounts classified as substandard or below⁽³⁾
Company (Credit Rating)⁽¹⁾	Won currency		Foreign currency		Equity securities		Debt securities		Guarantees and acceptances		Total exposures		Collateral⁽²⁾		Amounts classified as substandard or below⁽³⁾		Won currency		Foreign currency		Equity securities		Debt securities		Guarantees and acceptances			Total exposures				Collateral⁽²⁾
	(in billions of Won)																(in billions of Won)
Korea Development Bank (AAA)																	￦	—	￦	6	￦	—	￦	11,917		￦	—			￦	11,923			￦	—		￦	8
Korean Government⁽⁴⁾																		—		—		—		9,647		—				9,647				—			—
The Bank of Korea⁽⁴⁾	￦	1,420	￦	—	￦	—	￦	6,610	￦	—	￦	8,030	￦	—	￦	—		1,660		—		—		6,501		—				8,161				—			—
Korean Government⁽⁴⁾		—		—		—		6,760		—		6,760		—		—
Korea Development Bank (AAA)		—		6		—		4,253		—		4,259		—		—
Industrial Bank of Korea (AAA)																		94		—		—		5,321		—				5,415				22			—
Korea Housing Finance Corporation (AAA)		—		—		—		3,172		—		3,172		—		—		—		—		—		5,059		—				5,059				—			—
U.S. Government⁽⁴⁾																		—		—		—		1,371		—				1,371				—			—
Export-Import Bank of Korea (AAA)																		—		—		—		1,299		8				1,307				—			—
KB Securities (AA+)																		1,100		—		—		40		—				1,140				—			—
Kyobo Securities (A+)																		1,016		—		—		—		—				1,016				—			—
Korea Student Aid Foundation (AAA)																		—		—		—		955		—				955				—			—
Korea SMEs and Startups Agency (AAA)																		1		—		—		822		—				823				—			—
Samsung Heavy Industries (BBB+)																		—		104		—		64		622				790				—			—
LG Display (A+)																		607		116		—		—		—				723				—			—
Mirae Asset Daewoo (AA)																		650		—		—		20		—				670				—			—
Defense Acquisition Program Administration (A)																		—		—		—		—		652				652				—			—
Korea Land & Housing Corporation (AAA)		465		—		—		2,516		—		2,981		—		—		328		—		—		309		—				637				—			—
Samsung Electronics (AA)		200		2,274		5		—		—		2,479		—		—
Mirae Asset Daewoo (AA+)		2,413		—		—		—		—		2,413		—		—
NH Investment & Securities (AA+)		2,332		—		—		—		—		2,332		—		—
Shinhan Investment (AAA)		1,780		—		—		—		—		1,780		—		—
Meritz Securities (AA-)		1,628		—		—		—		—		1,628		—		—
Industrial Bank of Korea (AAA)		64		24		—		1,496		—		1,584		—		—
Kyobo Securities (A+)		1,284		—		—		—		—		1,284		—		—
Samsung Securities (AA+)		1,280		—		—		—		—		1,280		—		—
KB Securities (AA)		1,270		—		—		—		—		1,270		—		—
Korea Securities Finance Corp. (AAA)		1,100		—		71		—		—		1,171		—		—
Hana Financial Investment (AA)		1,120		—		—		—		—		1,120		—		—
Defense Acquisition Program Administration⁽⁴⁾		—		—		—		—		1,114		1,114		—		—
Korea Investment & Securities (AA)		1,063		—		—		—		—		1,063		—		—
Samsung Heavy Industries (BBB+)		100		46		—		—		793		939		50		—
Export-Import Bank of Korea (AAA)		1		—		—		880		—		881		—		—
DS Investment & Securities (BB)																		634		—		—		—		—				634				—			—
Shinhan Investment (AA)																		602		—		—		—		—				602				—			—
Posco International(AA-)																		—		165		—		—		390				555				—			—
LG Electronics (AA)																		424		93		—		20		17				554				—			—

Total	￦	17,520	￦	2,350	￦	76	￦	25,687	￦	1,907	￦	47,540	￦	50	￦	—	￦	7,116	￦	484	￦	—	￦	43,345	￦	1,689			￦	52,634			￦	22		￦	8


	Aggregate corporate loan balance		Percentage of total corporate loan balance			Aggregate corporate loan balance		Percentage of total corporate loan balance
	(in billions of Won)					(in billions of Won)
Industry
Manufacturing	￦	36,189		26.4	%	￦	36,094		25.9	%
Financial and insurance		25,084		18.4			18,834		13.5
Retail and wholesale		17,036		12.5			17,538		12.6
Hotel, leisure or transportation		7,378		5.4
Hotel, leisure and transportation							8,203		5.9
Construction		4,503		3.3			4,211		3.0
Government and government agencies		311		0.2			336		0.2
Other		46,175		33.8			54,376		39.0

Total	￦	136,676		100.0	%	￦	139,592		100.0	%


	1 year or less		Over 1 year but not more than 5 years		Over 5 years		Total		1 year or less		Over 1 year but not more than 5 years		Over 5 years		Total
	(in billions of Won)								(in billions of Won)
Domestic
Corporate⁽¹⁾
Commercial and industrial	￦	62,779	￦	24,970	￦	5,571	￦	93,320	￦	64,800	￦	31,084	￦	4,945	￦	100,829
Lease financing		—		25		—		25		4		73		—		77
Trade financing		9,290		—		—		9,290		6,766		—		—		6,766
Other commercial		18,438		2,085		760		21,283		9,594		3,452		702		13,748

Total corporate		90,507		27,080		6,331		123,918		81,164		34,609		5,647		121,420
Consumer
General purpose household		19,219		6,399		8,756		34,374		20,491		6,548		10,566		37,605
Mortgage		10,827		9,945		26,704		47,476		12,557		13,017		28,937		54,511
Home equity		3,737		3,437		18,339		25,513		2,590		2,577		23,455		28,622

Total consumer		33,783		19,781		53,799		107,363		35,638		22,142		62,958		120,738
Credit cards		5,997		766		64		6,827		7,031		1,098		270		8,399

Total domestic		130,287		47,627		60,194		238,108		123,833		57,849		68,875		250,557
Foreign
Corporate⁽²⁾
Commercial and industrial		5,635		3,122		875		9,632		8,036		5,706		1,802		15,544
Trade financing		2,655		—		—		2,655		1,782		—		—		1,782
Other commercial		260		175		36		471		243		462		140		845

Total corporate		8,550		3,297		911		12,758		10,061		6,168		1,942		18,171
Consumer
Other consumer		168		478		1,281		1,927		592		778		1,895		3,265

Total foreign		8,718		3,775		2,192		14,685		10,653		6,946		3,837		21,436

Total loans	￦	139,005	￦	51,402	￦	62,386	￦	252,793	￦	134,486	￦	64,795	￦	72,712	￦	271,993


Asset Classification		Characteristics
Normal		Credits extended to customers that, based on our consideration of their business, financial position and future cash flows, do not raise concerns regarding their ability to repay the credits.

Precautionary		Credits extended to customers that:
		• based on our consideration of their business, financial position and future cash flows, show potential risks with respect to their ability to repay the credits, although showing no immediate default risk; or
		• are in arrears for one month or more but less than three months.


Asset Classification		Characteristics
Substandard		Either:
		• credits extended to customers that, based on our consideration of their business, financial position and future cash flows, are judged to have incurred considerable default risks as their ability to repay has deteriorated; or


~~Asset Classification~~		~~Characteristics~~
		• the portion that we expect to collect of total loans (1) extended to customers that have been in arrears for three months or more, (2) extended to customers that have incurred serious default risks due to the occurrence of, among other things, final refusal to pay their debt instruments, entry into liquidation or bankruptcy proceedings, or closure of their businesses, or (3) extended to customers who have outstanding loans that are classified as “doubtful” or “estimated loss.”

Doubtful		Credits exceeding the amount we expect to collect of total credits to customers that:
		• based on our consideration of their business, financial position and future cash flows, have incurred serious default risks due to noticeable deterioration in their ability to repay; or
		• have been in arrears for three months or more but less than ~~twelve~~12 months.

Estimated Loss		Credits exceeding the amount we expect to collect of total credits to customers that:
		• based on our consideration of their business, financial position and future cash flows, are judged to have to be accounted as a loss as the inability to repay became certain due to serious deterioration in their ability to repay;
		• have been in arrears for ~~twelve~~12 months or more; or
		• have incurred serious risks of default in repayment due to the occurrence of, among other things, final refusal to pay their debt instruments, liquidation or bankruptcy proceedings or closure of their business.


	As of December 31, 2016																														As of December 31, 2018
	Normal					Past due by 1 month or less					Past due by 1-3 months					Past due by 3-6 months					Past due by more than 6 months					Total					Normal					Past due by 1 month or less					Past due by 1-3 months					Past due by 3-6 months					Past due by more than 6 months					Total
	(in billions of Won, except percentages)																														(in billions of Won, except percentages)
	Amount		%			Amount past due		%			Amount past due		%			Amount past due		%			Amount past due		%			Amount		%			Amount		%			Amount past due		%			Amount past due		%			Amount past due		%			Amount past due		%			Amount		%
Domestic
Corporate⁽¹⁾
Commercial and industrial	￦	88,313		37.4	%	￦	162		0.1	%	￦	98		0.0	%	￦	97		0.0	%	￦	298		0.2	%	￦	88,968		37.7	%	￦	95,811		36.6	%	￦	169		0.1	%	￦	117		0.0	%	￦	84		0.0	%	￦	102		0.0	%	￦	96,283		36.7	%
Lease financing		7		0.0			—		0.0			—		0.0			—		0.0			—		0.0			7		0.0			55		0.0			—		0.0			—		0.0			—		0.0			—		0.0			55		0.0
Trade financing		10,671		4.5			4		0.0			4		0.0			10		0.0			10		0.0			10,699		4.5			9,633		3.7			3		0.0			3		0.0			6		0.0			4		0.0			9,649		3.7
Other commercial		12,843		5.4			6		0.0			2		0.0			17		0.0			55		0.0			12,923		5.4			16,133		6.2			6		0.0			3		0.0			3		0.0			32		0.0			16,177		6.2

Total corporate		111,834		47.3			172		0.1			104		0.0			124		0.0			363		0.2			112,597		47.6			121,632		46.5			178		0.1			123		0.0			93		0.0			138		0.0			122,164		46.6
Consumer
General purpose household		30,412		12.9			141		0.1			30		0.0			21		0.0			80		0.0			30,684		13.0			36,652		14.0			170		0.1			55		0.0			37		0.0			48		0.0			36,962		14.1
Mortgages		47,328		20.1			225		0.1			38		0.0			18		0.0			21		0.0			47,630		20.2			50,862		19.5			281		0.1			59		0.0			39		0.0			39		0.0			51,280		19.6
Home equity		24,269		10.3			112		0.0			24		0.0			17		0.0			64		0.0			24,486		10.3			26,112		10.0			117		0.0			36		0.0			24		0.0			35		0.0			26,324		10.0

Total consumer		102,009		43.3			478		0.2			92		0.0			56		0.0			165		0.0			102,800		43.5			113,626		43.5			568		0.2			150		0.0			100		0.0			122		0.0			114,566		43.7
Credit cards		6,502		2.7			92		0.0			51		0.0			29		0.0			—		0.0			6,674		2.7			7,818		3.1			123		0.0			58		0.0			52		0.0			—		0.0			8,051		3.1

Total domestic		220,345		93.3			742		0.3			247		0.0			209		0.0			528		0.2			222,071		93.8			243,076		93.1			869		0.3			331		0.0			245		0.0			260		0.0			244,781		93.4
Foreign
Corporate⁽²⁾
Commercial and industrial		10,449		4.5			1		0.0			2		0.0			36		0.0			52		0.0			10,540		4.5			11,778		4.5			8		0.0			13		0.0			3		0.0			35		0.0			11,837		4.5
Trade financing		2,155		0.9			—		0.0			—		0.0			—		0.0			1		0.0			2,156		0.9			2,185		0.8			—		0.0			—		0.0			—		0.0			1		0.0			2,186		0.8
Other commercial		350		0.1			—		0.0			—		0.0			—		0.0			—		0.0			350		0.1			700		0.3			—		0.0			—		0.0			—		0.0			—		0.0			700		0.3

Total corporate		12,954		5.5			1		0.0			2		0.0			36		0.0			53		0.0			13,046		5.5			14,663		5.6			8		0.0			13		0.0			3		0.0			36		0.0			14,723		5.6
Consumer		1,664		0.7			2		0.0			6		0.0			2		0.0			10		0.0			1,684		0.7			2,502		1.0			3		0.0			4		0.0			4		0.0			17		0.0			2,530		1.0

Total foreign		14,618		6.2			3		0.0			8		0.0			38		0.0			63		0.0			14,730		6.2			17,165		6.6			11		0.0			17		0.0			7		0.0			53		0.0			17,253		6.6

Total loans⁽³⁾	￦	234,963		99.5	%	￦	745		0.3	%	￦	255		0.0	%	￦	247		0.0	%	￦	591		0.2	%	￦	236,801		100.0	%	￦	260,241		99.7	%	￦	880		0.3	%	￦	348		0.0	%	￦	252		0.0	%	￦	313		0.0	%	￦	262,034		100.0	%


	Loans														Amounts Classified as Substandard or Below⁽²⁾		Allowance for Credit Loss
Company	Won Currency		Foreign Currency		Equity Securities		Debt Securities		Guarantees and Acceptances		Total Exposures		Collateral⁽¹⁾		Amounts Classified as Substandard or Below⁽²⁾		Allowance for Credit Loss
	(in billions of Won)
Orient Shipyard	￦	—	￦	—	￦	—	￦	—	￦	76	￦	76	￦	—	￦	76	￦	18
Posco Plantec		68		—		—		—		—		68		20		68		49
Dongmoon Construction		49		—		—		—		—		49		20		28		9
STX Heavy Industries		19		—		—		—		19		38		25		13		13
DB Metal		—		22		—		—		8		30		—		30		19
Chuncheon Golf Academy		21		—		—		—		—		21		18		21		1
Dongbu Steel		—		13		4		—		1		18		—		1		1
NTS		17		—		—		—		—		17		11		17		2
Samhongsa		16		—		—		—		—		16		9		—		1
Korea Development		15		—		—		—		—		15		—		15		10

Total	￦	205	￦	35	￦	4	￦	—	￦	104	￦	348	￦	103	￦	269	￦	123


	~~Amount~~
	~~(in billions of Won)~~
~~Balance of potential problem loans at December 31, 2016~~	￦	~~1,158~~
~~Increase in the balance of potential problem loans to borrowers who became newly classified as borrowers with potential problem loans in 2017~~		~~404~~
~~Decrease in the balance of potential problem loans to borrowers to whom we had potential problem loans outstanding at December 31, 2016 and have non-performing loans outstanding at December 31, 2017~~		~~(41~~	)
~~Decrease in the balance of potential problem loans to borrowers to whom we had potential problem loans outstanding at December 31, 2016 but no longer have any loans outstanding at December 31, 2017~~		~~(515~~	)
Decrease in the balance of potential problem loans to borrowers to whom we had potential problem loans outstanding at December 31, 2016 but have loans outstanding classified as normal at December 31, 2017		~~(74~~	)
~~Net other decrease in the balance of potential problem loans to existing borrowers to whom we had potential problems loans outstanding at December 31, 2017~~		5

~~Balance at December 31, 2017~~	￦	~~937~~


	~~2017~~
	~~(in billions of Won)~~
~~Non-performing loans as of January 1, 2017~~	￦	~~2,080~~
~~Additions to non-performing loans~~
~~Loans transferred into non-performing loans~~		~~1,443~~
~~Reductions in non-performing loans~~
~~Loans sold~~		~~(319~~	)
~~Loans modified and returned to performing loans~~		~~(189~~	)
~~Loans paid down or paid off~~		~~(350~~	)
~~Loans charged-off~~		~~(812~~	)
~~Other~~		—

~~Total net reductions to non-performing loans~~		~~(227~~	)

~~Total non-performing loans as of December 31, 2017~~	￦	~~1,853~~


	Gross principal outstanding		Allowance for credit losses		Collateral⁽¹⁾		Industry	Gross principal outstanding		Allowance for credit losses		Collateral⁽¹⁾		Industry
	(in billions of Won)							(in billions of Won)
Borrower A	￦	170	￦	157	￦	45	Manufacturing	￦	53	￦	43	￦	19	Manufacturing
Borrower B		166		139		—	Manufacturing		34		—		30	Manufacturing
Borrower C		78		65		—	Manufacturing		32		29		—	Shipping
Borrower D		72		12		68	Shipbuilding		31		18		—	Manufacturing
Borrower E		71		40		—	Real estate		27		22		—	Manufacturing
Borrower F		68		49		20	Manufacturing		21		3		—	Construction
Borrower G		53		38		—	Retail and wholesale		19		6		—	Shipbuilding
Borrower H		33		30		—	Manufacturing		17		17		—	Manufacturing
Borrower I		32		30		—	Shipping		16		5		9	Manufacturing
Borrower J		31		18		—	Shipbuilding		16		16		—	Other
Borrower K		28		9		20	Construction		16		6		15	Manufacturing
Borrower L		28		3		24	Real estate		13		7		—	Manufacturing
Borrower M		27		16		—	Manufacturing		12		4		12	Manufacturing
Borrower N		22		19		—	Manufacturing		11		—		—	Manufacturing
Borrower O		21		1		18	Real estate		10		10		—	Manufacturing
Borrower P		19		18		—	Manufacturing		10		—		—	Manufacturing
Borrower Q		17		2		—	Real estate		9		—		—	Other
Borrower R		17		2		11	Manufacturing		8		5		1	Other
Borrower S		17		14		17	Manufacturing		8		3		6	Manufacturing
Borrower T		16		15		—	Manufacturing		8		3		4	Manufacturing

Total	￦	986	￦	677	￦	223		￦	371	￦	197	￦	96


Item	Non-performing loans	Impaired loans
Relevant regulation or accounting principle	Banking Industry Supervision Regulations of Korea (loans classified as “substandard,” “doubtful” or “estimated loss”)	Our internal policy based on IFRS 9 (or IAS 3939)

Scope	Loans	Loans ~~and receivables~~ ((not including due from banks and other financial assets) under IFRS 9 (or loans and receivables (including due from banks and other receivables) under IAS 39)

Purchased impaired loans	Not included	Included

Loans classified as “precautionary” based on the Financial Services Commission’s asset classification criteria	Not included	Loans classified as “precautionary,” for which the borrower has a capital deficit or its auditor’s opinion on its financial statements is modified or qualified, are included


Subsidiary	Percentage of Ownership			Total Assets		Shareholders’ Equity		Operating Revenue		Net Income
	(in millions of Won)
Woori Card Co., Ltd.		100.0	%	￦	8,605,993	￦	1,632,288	￦	1,771,157	￦	101,214
Woori Investment Bank Co., Ltd.		59.8	%		1,880,157		291,548		183,376		20,023
Woori FIS Co., Ltd.		100.0	%		103,932		32,546		252,460		1,940
Woori Finance Research Institute Co., Ltd.		100.0	%		3,790		3,441		4,733		83
Woori Credit Information Co., Ltd.		100.0	%		33,298		27,124		31,580		861
Woori Fund Service Co., Ltd.		100.0	%		12,653		11,411		9,021		1,398
Woori Private Equity Asset Management Co., Ltd.		100.0	%		42,894		40,225		7,257		(4,114	)
Korea BTL Infrastructure Fund.		99.9	%		786,480		786,180		30,240		26,390
Woori America Bank.		100.0	%		1,954,301		275,053		81,337		11,869
Woori Bank (China) Limited.		100.0	%		4,960,637		501,953		388,913		13,809
PT Bank Woori Saudara Indonesia 1906, Tbk		79.9	%		2,230,617		485,446		192,485		38,488
AO Woori Bank.		100.0	%		201,704		52,603		15,656		4,748
Banco Woori Bank do Brasil S.A.		100.0	%		213,889		32,346		20,455		1,843
Woori Global Market Asia Limited		100.0	%		290,226		111,884		11,345		1,922
Woori Finance Cambodia		100.0	%		51,304		18,431		5,895		983
Woori Finance Myanmar		100.0	%		18,236		12,929		2,506		791
Wealth Development Bank Corp.		51.0	%		191,049		34,240		13,632		1,323
Woori Bank Vietnam Limited		100.0	%		775,758		143,598		29,698		2,436


	June 30, 2013			Dec. 31, 2013			June 30, 2014			Dec. 31, 2014			June 30, 2015			Dec. 31, 2015			June 30, 2016			Dec. 31, 2016			June 30, 2017			Dec. 31, 2017			June 30, 2015			Dec. 31, 2015			June 30, 2016			Dec. 31, 2016			June 30, 2017			Dec. 31, 2017			June 30, 2018			Dec. 31, 2018			June 30, 2019			Dec. 31, 2019
KOSPI		1,863.32			2,011.34			2,002.21			1,915.59			2,074.20			1,961.31			1,970.35			2,026.46			2,391.79			2,467.49			2,074.20			1,961.31			1,970.35			2,026.46			2,391.79			2,467.49			2,326.13			2,041.04			2,130.62			2,197.67
￦/US$ exchange rates⁽¹⁾	￦	1,141.45		￦	1,055.25		￦	1,011.60		￦	1,090.89		￦	1,117.34		￦	1,169.26		￦	1,154.15		￦	1,203.73		￦	1,143.75		￦	1,067.42		￦	1,117.34		￦	1,169.26		￦	1,154.15		￦	1,203.73		￦	1,143.75		￦	1,067.42		￦	1,111.79		￦	1,112.85		￦	1,154.58		￦	1,155.46
Corporate bond rates⁽²⁾		3.5	%		3.6	%		3.4	%		2.8	%		2.5	%		2.6	%		2.3	%		2.8	%		2.8	%		3.1	%		2.5	%		2.6	%		2.3	%		2.8	%		2.8	%		3.1	%		2.9	%		2.6	%		2.0	%		2.0	%
Treasury bond rates⁽³⁾		2.9	%		2.8	%		2.6	%		2.1	%		1.8	%		1.7	%		1.3	%		1.6	%		1.7	%		2.1	%		1.8	%		1.7	%		1.3	%		1.6	%		1.7	%		2.1	%		2.1	%		1.8	%		1.5	%		1.4	%


	Year ended December 31,									Percentage change
	2015			2016			2017			2016/2015			2017/2016
	(in billions of Won)									(%)
Interest income
Due from banks	￦	81		￦	75		￦	83			(7.4	)%		10.7	%
Loans		7,700			7,635			7,836			(0.8	)		2.6
Financial assets at fair value through profit or loss		63			63			53			—			(15.9	)
Investment financial assets⁽¹⁾		808			700			548			(13.4	)		(21.7	)
Other receivables		46			39			31			(17.4	)		(18.4	)

Total interest income		8,698			8,512			8,551			(2.1	)		0.5

Interest expense
Deposits		2,888			2,547			2,380			(11.8	)		(6.6	)
Borrowings		217			215			238			(0.9	)		10.7
Debentures		708			619			639			(12.6	)		3.2
Others		123			111			73			(9.8	)		(34.2	)

Total interest expense		3,936			3,492			3,330			(11.3	)		(4.6	)

Net interest income	￦	4,762		￦	5,020		￦	5,221			5.4	%		4.0	%

Net interest margin⁽²⁾		1.74	%		1.71	%		1.74	%


	Net income Year ended December 31,							Total operating income⁽¹⁾ Year ended December 31,
	2015		2016			2017		2015		2016		2017
	(in billions of Won)
Consumer banking	￦	26	￦	99		￦	264	￦	54	￦	166	￦	446
Corporate banking		317		610			918		418		815		1,217
Investment banking		165		84			106		174		65		100
Capital markets		11		(3	)		92		15		1		122
Credit card		117		109			101		155		144		138
Other operations		552		514			22		551		441		73

Total⁽²⁾	￦	1,188	￦	1,413		￦	1,503	￦	1,367	￦	1,632	￦	2,096


	Net incomeYear ended December 31,						Total operating income⁽¹⁾Year ended December 31,
	2017		2018		2019		2017		2018		2019
	(in billions of Won)
Banking	￦	1,354	￦	1,916	￦	1,862	￦	1,905	￦	2,559	￦	2,629
Credit card		101		127		114		138		172		136
Investment banking		20		33		53		22		33		56
Others		—		3		633		6		5		636

Total	￦	1,476	￦	2,079	￦	2,663	￦	2,071	￦	2,770	￦	3,458


	Payments due by period										Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in billions of Won)										(in billions of Won)
Contractual obligations
Borrowing obligations⁽¹⁾	￦	15,081	￦	10,676	￦	3,048	￦	877	￦	480	￦	19,791	￦	15,588	￦	2,817	￦	865	￦	521
Debenture obligations⁽¹⁾		29,811		7,171		14,910		4,860		2,870		32,818		11,070		13,112		6,099		2,537
Deposits⁽²⁾⁽³⁾		238,250		228,216		6,447		962		2,625		267,508		259,040		5,933		657		1,878
Capital (finance) lease obligations		2		2		—		—		—
Operating lease obligations		1,513		260		493		486		274
Lease obligations												435		161		142		91		41
Purchase obligations		65		14		20		20		11		87		17		28		28		14
Employee severance plan obligations		2,329		68		160		128		1,973		2,737		16		163		146		2,412

Total	￦	287,051	￦	246,407	￦	25,078	￦	7,333	￦	8,233	￦	323,376	￦	285,892	￦	22,195	￦	7,886	￦	7,403


Name	~~Age~~	Date of Birth		Position		Director Since
~~Tae-Seung Sohn~~			60Year Term Ends⁽¹⁾
Tae-Seung Son	May 16, 1959		President and Chief Executive Officer		December 22, 2017
~~Jung-Sik Oh~~ ⁽²⁾		622023
Won-Duk Lee	January 15, 1962		Director and ~~Standing Audit Committee Member~~Deputy President		March ~~24, 2017~~25, 2020		2021


Name	~~Age~~Date of Birth			Position
~~An-Ho Jang~~		60			~~Executive Vice President~~
~~Woon-Haeng Cho~~		59			~~Executive Vice President~~
~~Seong-Il~~Kyong-Hoon Park		62December 19, 1962			~~Compliance Officer~~Deputy President
~~Sun-Kyu~~Dong-Su Choi	September 25, 1962		Deputy President
Jeong-Ki Kim		60May 15, 1962			~~Executive Vice~~Deputy President
~~Yeong-Bae Kim~~		62			~~Executive Vice President~~
~~Jeong-Jin Heo~~		61			~~Executive Vice President~~
~~Dong-Yeon Lee~~		59			~~Executive Vice President~~
~~Hyun-Poong Hong~~		61			~~Executive Vice President~~
~~Chai-Pong Cheong~~		60			~~Executive Vice President~~

Type of Facility/Building

(square meters)

Woori Bank registered office and corporate headquarters

51,Sogong-ro,Jung-gu, Seoul, Korea 04632

Woori FIS registered office and corporate headquarters

17, World Cup ~~buk-ro 60-gil,~~ buk-ro60-gil,Mapo-gu, Seoul, Korea 03921