Exhibit 99.4
KB Financial Group Inc.
Interim Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
KB Financial Group Inc.
Non-Consolidated Interim Financial Statements
Index
March 31, 2009
Index
March 31, 2009
Page(s) | ||||
Non-Consolidated Interim Financial Statements | ||||
Statement of Financial Position | 3 | |||
Statement of Income | 4 | |||
Statement of Changes in Shareholders’ Equity | 5 | |||
Statement of Cash Flows | 6 | |||
Notes to Non-Consolidated Interim Financial Statements | 8 |
2
KB Financial Group Inc.
Non-Consolidated Statement of Financial Position
March 31, 2009 and December 31, 2008
March 31, 2009 and December 31, 2008
(in millions of Korean won) | 2009 | 2008 | ||||||
Assets | ||||||||
Cash and due from banks (Notes 3, 18 and 20) | 25,778 | 1,849 | ||||||
Equity method investments (Notes 4 and 20) | 16,644,380 | 16,345,052 | ||||||
Loans receivable, net (Notes 5 and 20) | 99,500 | 199,000 | ||||||
Property and equipment, net (Note 6) | 2,884 | 3,214 | ||||||
Other assets, net (Notes 7 and 18) | 23,506 | 18,904 | ||||||
Total assets | 16,796,048 | 16,568,019 | ||||||
Liabilities and shareholders’ equity | ||||||||
Liabilities | ||||||||
Borrowings (Notes 8, 20 and 23) | 80,000 | 232,000 | ||||||
Debentures, net of discount (Notes 8 and 20) | 797,760 | 498,572 | ||||||
Other liabilities, net (Notes 9, 13 and 14) | 12,178 | 8,836 | ||||||
Total liabilities | 889,938 | 739,408 | ||||||
Shareholders’ equity | ||||||||
Common stock (Note 10) | 1,781,758 | 1,781,758 | ||||||
Capital surplus (Note 11) | 15,473,511 | 15,473,511 | ||||||
Capital adjustment (Note 4) | (3,146,561 | ) | (3,145,102 | ) | ||||
Accumulated other comprehensive income (Note 16) | 926,050 | 1,087,503 | ||||||
Retained earnings | 871,352 | 630,941 | ||||||
Total shareholders’ equity | 15,906,110 | 15,828,611 | ||||||
Total liabilities and shareholders’ equity | 16,796,048 | 16,568,019 | ||||||
The accompanying notes are an integral part of these non-consolidated financial statements.
3
KB Financial Group Inc.
Non-Consolidated Statement of Income
For the Three-month Period Ended March 31, 2009
For the Three-month Period Ended March 31, 2009
(in millions of Korean won, except per share amounts) | 2009 | |||
Operating revenues | ||||
Gain on valuation of equity method investments (Notes 4 and 21) | 257,466 | |||
Interest income (Note 18) | 3,494 | |||
Reversal of allowance for loans (Note 5) | 500 | |||
261,460 | ||||
Operating expenses | ||||
Loss on valuation of equity method investments (Notes 4 and 21) | 448 | |||
Interest expense | 13,461 | |||
Commission expense | 2,247 | |||
Selling and administrative expenses (Notes 6, 7, 9, 13, 18 and 24) | 6,893 | |||
23,049 | ||||
Operating income | 238,411 | |||
Non-operating income | 138 | |||
Income before income taxes | 238,549 | |||
Income tax expense (Note 14) | 218 | |||
Net income | 238,331 | |||
Per share data (Note 15) | ||||
Basic and diluted earnings per share | 771 |
The accompanying notes are an integral part of these non-consolidated financial statements.
4
KB Financial Group Inc.
Non-Consolidated Statement of Changes in Shareholders’ Equity
For the Three-month Period Ended March 31, 2009
For the Three-month Period Ended March 31, 2009
Accumulated | ||||||||||||||||||||||||
other | ||||||||||||||||||||||||
comprehensive | ||||||||||||||||||||||||
Capital | Capital | Capital | income and | Retained | ||||||||||||||||||||
(in millions of Korean won) | stock | surplus | adjustment | expense | earnings | Total | ||||||||||||||||||
January 1, 2009 | 1,781,758 | 15,473,511 | (3,145,102 | ) | 1,087,503 | 630,941 | 15,828,611 | |||||||||||||||||
Net income | — | — | — | — | 238,331 | 238,331 | ||||||||||||||||||
Changes in equity method investments | — | — | (1,459 | ) | (161,453 | ) | 2,080 | (160,832 | ) | |||||||||||||||
March 31, 2009 | 1,781,758 | 15,473,511 | (3,146,561 | ) | 926,050 | 871,352 | 15,906,110 | |||||||||||||||||
The accompanying notes are an integral part of these non-consolidated financial statements.
5
KB Financial Group Inc.
Non-Consolidated Statement of Cash Flows
For the Three-month Period Ended March 31, 2009
For the Three-month Period Ended March 31, 2009
(in millions of Korean won) | 2009 | |||
Cash flows from operating activities | ||||
Net income | 238,331 | |||
Adjustments to reconcile net income to net cash used in operating activities | ||||
Loss on valuation of equity method investments | 448 | |||
Provision for severance benefits | 1,139 | |||
Stock compensation expense | 167 | |||
Depreciation and amortization | 543 | |||
Interest expense | 122 | |||
Gain on valuation of equity method investments | (257,466 | ) | ||
Reversal of allowance for loans | (500 | ) | ||
Gain on valuation of pension plan assets | (39 | ) | ||
(255,586 | ) | |||
Changes in operating assets and liabilities | ||||
Decrease in equity method investments (dividend income) | 98,200 | |||
Decrease in accounts receivable | 2 | |||
Decrease in accrued income | 960 | |||
Decrease in prepaid expenses | 682 | |||
Increase in other assets | (71 | ) | ||
Decrease in accounts payable | (14 | ) | ||
Increase in accrued expense | 503 | |||
Increase in deferred tax liabilities | 218 | |||
Succession in severance and retirement benefits | 109 | |||
Increase in pension plan assets | (72 | ) | ||
Decrease in withholding tax payables | (11 | ) | ||
100,506 | ||||
Net cash provided by operating activities | 83,251 | |||
6
KB Financial Group Inc.
Non-Consolidated Statement of Cash Flows
For the Three-month Period Ended March 31, 2009
For the Three-month Period Ended March 31, 2009
(in millions of Korean won) | 2009 | |||
Cash flows from investing activities | ||||
Collection of loans | 100,000 | |||
Acquisition of equity method investments | (300,000 | ) | ||
Acquisition of property and equipment | (83 | ) | ||
Acquisition of guarantee deposits | (6,305 | ) | ||
Net cash used in investing activities | (206,388 | ) | ||
Cash flows from financing activities | ||||
Proceeds from borrowings | 25,000 | |||
Proceeds from debentures | 299,066 | |||
Payment of borrowings | (177,000 | ) | ||
Net cash provided by financing activities | 147,066 | |||
Net increase in cash and cash equivalents | 23,929 | |||
Cash and cash equivalents (Note 17) | ||||
Beginning of period | 1,846 | |||
End of period | 25,775 | |||
The accompanying notes are an integral part of these non-consolidated financial statements.
7
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
1. The Company
KB Financial Group Inc. (the “Company”), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfer with former shareholders of Kookmin Bank, KB Investment & Securities Co., Ltd., KB Asset Management Co., Ltd., KB Real Estate Trust Co., Ltd., KB Investment Co., Ltd., KB Futures Co., Ltd., KB Credit Information Co., Ltd., and KB Data Systems Co., Ltd. in order to provide management services and financing to associated companies. The headquarters are located at 9-1 Namdaemunro 2-ga, Jung-gu, Seoul. The Company’s common stock as of March 31, 2009, isW1,781,758 million.
The Company is authorized to issue 1,000 million shares. The Company was listed on the Korea Exchange (“KRX”) on October 10, 2008, and was also listed on the New York Stock Exchange (“NYSE”) for its American Depositary Shares (“ADS”) on September 29, 2008.
A major shareholder as of March 31, 2009, is as follows:
Number of Shares | Percentage of | |||||||
Name of Shareholder | Owned | Ownership(%) | ||||||
National Pension Service | 22,548,541 | 6.33 |
Details of its subsidiaries are as follows:
(1) Kookmin Bank
Kookmin Bank (the “Bank”) was established in 1963 under the Citizens National Bank Act to provide and administer funds for financing to the general public and small businesses. Pursuant to the repeal of the Citizens National Bank Act, effective January 5, 1995, the Bank has conducted its operations in accordance with the provisions of the General Banking Act. The Bank merged with Korea Long Term Credit Bank on December 31, 1998, and with Daegu, Busan, Jeonnam Kookmin Mutual Savings & Finance Co., Ltd. on August 22, 1999. Also, under the decision of the Financial Services Commission in accordance with the Structural Improvement of the Financial Industry Act, the Bank purchased certain assets, including loans classified as normal or precautionary, and assumed most of the liabilities of Daedong Bank on June 29, 1998. Also, the Bank completed the legal consolidation with Housing and Commercial Bank (“H&CB”) on October 31, 2001 and merged with Kookmin Credit Card Co., Ltd., a majority-owned subsidiary, on September 30, 2003. Kookmin Bank’s common stock as of March 31, 2009, isW2,481,896 million.
The Bank’s shares have been listed on the KRX since September 1994. As a result of the business combination with H&CB, the former shareholders of the Bank and H&CB received new common shares of the Bank on the basis of a pre-determined ratio. The new common shares of the Bank were listed on the KRX on November 9, 2001. In addition, the Bank listed its ADS on the NYSE on November 1, 2001, following the consolidation with H&CB. H&CB listed its ADS on the NYSE on October 3, 2000, prior to the business combination. The Bank became a wholly owned subsidiary of the Company through a comprehensive stock transfer on September 29, 2008. In addition, the Bank’s listed shares and depositary shares on the KRX and the NYSE were delisted on October 10, 2008 and September 26, 2008, respectively.
8
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
The Bank is engaged in the banking, trust, credit card and other relevant businesses according to the provisions of the General Banking Act, Trust Business Act and Specialized Credit Financial Business Act, respectively. The Bank, with headquarters based in Seoul, operates through 1,193 domestic branches and offices (excluding 303 automated teller machine stations) and five overseas branches (excluding two subsidiaries and three offices) as of March 31, 2009.
(2) KB Investment & Securities Co., Ltd.
KB Investment & Securities Co., Ltd. (the “KB Investment & Securities”) was established on August 16, 1995, to engage in security trading, underwriting and brokerage services. On March 11, 2008, the former name of Hannuri Investment & Securities changed to KB Investment & Securities. Its headquarters are located in Seoul. KB Investment & Securities common stock as of March 31, 2009, isW78,000 million.
(3) KB Asset Management Co., Ltd.
KB Asset Management Co., Ltd. (the “KB Asset Management”) was established on April 1988 to engage in investment advisory services including consulting and providing information on investment in securities and on July 1997, started to engage in security investment trust operations under the Security Investment Trust Business Act. Its headquarters are located in Seoul. KB Asset Management’s common stock as of March 31, 2009, isW38,338 million.
(4) KB Real Estate Trust Co., Ltd.
KB Real Estate Trust Co., Ltd. (the “KB Real Estate Trust”) was established on December 3, 1996, to provide real estate trust services including land trust. Under Section 3 of the Trust Business Act, Financial Services Commission authorized the company to engage in real estate trust service. On September 16, 2002, the name of the company changed to KB Real Estate Trust Co., Ltd. from Jooeun Real Estate Trust Inc.. 25 land trust operations are in progress, and a number of other trust services such as collateral trusts are already engaged and ready to operate. Its headquarters are located in Seoul. KB Real Estate Trust’s common stock as of March 31, 2009, isW80,000 million.
(5) KB Investment Co., Ltd.
KB Investment Co., Ltd. (the “KB Investment”) was established on March 27, 1990, to provide services to small startup companies. Its main business is to invest in venture companies and small startup companies, and to organize startup investment cooperatives and private equity funds. On April 3, 1990, the company under Section 7 of the Support for Small and Medium Enterprise Establishment Act was listed on Small Business Administration as a small startup business investment organization. KB Investment purchases impaired loans, invests in companies under debt restructuring process, and sells reorganized companies after normalization. On March 2001, the company, under the Industrial Development Act, registered as Corporate Restructuring Company in the Ministry of Knowledge Economy. Its headquarters are located in Seoul. KB Investment’s common stock as of March 31, 2009, isW44,759 million.
(6) KB Futures Co., Ltd.
KB Futures Co., Ltd. (the “KB Futures”) was established on March 1997 to engage in futures trading, trust, intermediation, or brokerage services. The company became a member of the KRX on January 8, 1999. Its headquarters are located in Seoul. KB Futures’ common stock as of March 31, 2009, isW20,000 million.
9
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
(7) KB Credit Information Co., Ltd.
KB Credit Information Co., Ltd. (the “KB Credit Information”) was established on October 9, 1999, under the Credit Information Protection Act to engage in loan collection services and credit research services. On May 2, 2002, the company merged with KM Credit Information Inc. to improve management of subsidiaries. As approved by its shareholders on October 28, 2002, its name was changed from Kookeun Credit Information Co., Ltd. to KB Credit Information Co., Ltd. Its headquarters are located in Seoul. KB Credit Information’s common stock as of March 31, 2009, isW6,262 million.
(8) KB Data Systems Co., Ltd.
KB Data Systems, Co., Ltd. (the “KB Data Systems”) was established on September 1991 to engage in computer system development and its sales, system maintenance, and information technology outsourcing services. Its headquarters are located in Seoul. KB Data Systems’ common stock as of March 31, 2009, isW8,000 million.
Details of its major second tier subsidiary are as follows:
KB Life Insurance Co., Ltd.
KB Life Insurance Co., Ltd. (the “KB Life Insurance”) was established on April 29, 2004, to engage in financial insurance operations. On May 31, 2004, the company merged with Hanil Life Insurance Co., Ltd., undertaking all the insurance contracts and related assets and liabilities. Life insurance business under the Insurance Business Act is one of the company’s major business operations. Its headquarters are located in Seoul. KB Life Insurance’s common stock as of March 31, 2009, isW156,000 million.
The percentage of ownership in subsidiaries as of March 31, 2009, is as follows:
Number of | ||||||||||
Investors | Investees | Shares | Ownership(%) | |||||||
KB Financial Group Inc. | Kookmin Bank | 496,379,116 | 100.00 | |||||||
KB Investment & Securities Co., Ltd. | 15,600,000 | 100.00 | ||||||||
KB Asset Management Co., Ltd. | 7,667,550 | 100.00 | ||||||||
KB Real Estate Trust Co., Ltd. | 16,000,000 | 100.00 | ||||||||
KB Investment Co., Ltd. | 8,951,797 | 100.00 | ||||||||
KB Futures Co., Ltd. | 4,000,000 | 100.00 | ||||||||
KB Credit Information Co., Ltd. | 1,252,400 | 100.00 | ||||||||
KB Data Systems Co., Ltd. | 800,000 | 100.00 | ||||||||
Kookmin Bank | KB Financial Group Inc. | 47,407,671 | 13.30 | |||||||
KB Life Insurance Co., Ltd. | 15,912,000 | 51.00 | ||||||||
Kookmin Bank Int’l Ltd. (London) | 20,000,000 | 100.00 | ||||||||
Kookmin Bank Hong Kong Ltd. | 2,000,000 | 100.00 | ||||||||
KB Investment & Securities Co., Ltd. | KB Investment & Securities Hong Kong Limited | 999,999 | 99.99 | |||||||
KB Investment Co., Ltd. | NPS-KBIC Private Equity Fund No.1 | 4,510,720,000 | 2.56 |
10
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
2. Significant Accounting Policies
The Korean Accounting Standards Board has published a series of Statements of Korean Financial Accounting Standards (“SKFAS”). The Company has adopted SKFAS No. 1 through No. 24, except No. 14, and No. 101 in the preparation of its financial statements as of and for the three-month period ended March 31, 2009. Significant accounting policies followed in the preparation of these financial statements are as follows:
Equity Method Investments
Investments in equity securities of subsidiaries, over which the Company exercises a significant control or influence, are accounted for using the equity method. Under the equity method, the Company accounts for its proportionate ownership in the book value of the subsidiary in current operations as adjustment to income or loss, retained earnings, capital surplus, capital adjustments, or accumulated other comprehensive income depending on the nature of the underlying change in the book value of the subsidiaries. The acquisition cost of the Company stock owned by its subsidiaries is deducted from the Company’s equity method investments and accounted as capital adjustment.
The Company discontinues the equity method for equity method investments when the Company’s share of accumulated losses equals the costs of the investments, and until the subsequent cumulative changes in its proportionate net income of the subsidiaries equals its cumulative proportionate net losses not recognized during the periods when the equity method was suspended.
Significant difference between expected cash flow from equity method investments and the Company’s proportionate ownership in the net book value of the investees is accounted for as impairment loss from equity method investments. When the estimated future expected cash flows from equity method investments exceed the carrying value after impairment, such recovery is recorded in current operations up to the recorded impairment loss amount.
If the equity method investee is one of the Company’s subsidiaries, which is subject to consolidation, the changes, arising from additional stock purchase or capital increase and from the net difference of net asset value of investee and acquisition cost, in net asset from the date of consolidation are reflected as changes in capital surplus or capital adjustment in the Company’s statement of financial position.
The excess of the acquisition cost over the proportionate fair value of the investee’s net asset is amortized using the straight-line method up to a maximum of 20 years. The excess of the proportionate fair value of net asset over the acquisition cost(“the excess”), arising from the agreed expected future loss or expense, is recognized as income when expected future loss or expense is incurred. The excess up to fair value of identifiable non-monetary assets is recognized as income over the years using the weighted average useful lives of non-monetary assets. The excess over fair value of identifiable non-monetary assets is recognized as income and reflected in the equity
Unrealized gains or losses on transactions between the Company and subsidiaries are eliminated to the extent of the Company’s interest in each equity method investee. Unrealized gains or losses from downstream sales is fully eliminated and reflected in equity method investments.
Allowance for Loan Losses
The Company provides an allowance for loan losses based on reasonable and objective
11
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
analysis of the borrowers’ capacity to repay their obligation.
Property and Equipment
The cost of property and equipment includes purchase costs, incidental costs directly related to preparing the property and equipment for use, and the discounted estimated costs to remove, dismantle or restore property and equipment at the end of the estimated useful lives of the related assets, when these costs meet the conditions for the recognition of liabilities.
Property and equipment are recorded as net of accumulated depreciation and impairment loss. Depreciation is computed using declining balance method based on the estimated useful lives of the assets as follows:
Items | Depreciation Method | Estimated Useful Life | ||
Property and equipment | Declining balance method | 4 years |
The Company’s land is revalued periodically by an independent appraiser. Any gain on revaluation, net of tax, is credited to accumulated other comprehensive income. On the other hand, loss on revaluation, net of tax, is first netted against accumulated other comprehensive income and the remainder is included in current operations.
Betterments and renewals, enhancing the value of the assets over their recently appraised value, are capitalized. However, routine maintenance and repairs are charged to expense as incurred.
The Company assesses the potential impairment of property and equipment when there is evidence that events or changes in circumstances have made the recovery of an asset’s carrying value unlikely. The carrying value of the assets is reduced to the estimated realizable value, and an impairment loss is recorded as a reduction in the carrying value of the related asset and charged to current operations. However, the recovery of the impaired assets is recorded in current operations up to the cost of the assets before impairment, net of accumulated depreciation, when the estimated recoverable value of the assets exceeds the carrying value after impairment.
Intangible Assets
Intangible assets included in other assets are recorded at the production costs or purchase costs plus incidental expenses less accumulated amortization. Intangible assets are amortized over the estimated economic useful lives of the related assets as follows:
Items | Depreciation Method | Estimated Useful Life | ||
Software | Straight-line | 4 years | ||
Others | Straight-line | 4 years |
12
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
The Company assesses the potential impairment of intangible assets when there is evidence that events or changes in circumstances have made the recovery of an asset’s carrying value unlikely. The carrying value of the intangible assets is reduced to the estimated realizable value, and an impairment loss is recorded as a reduction in the carrying value of the related asset and charged to current operations. However, the recovery of the impaired intangible assets is recorded in current operations up to the cost of the intangible assets before impairment, net of accumulated amortization, when the estimated recoverable value of the assets exceeds the carrying value after impairment.
Discounts on Debentures
Discounts on debentures are amortized over the term of the debentures using the effective interest rate method. Amortization of the discount is recorded as part of interest expense.
Accrued Severance Benefits
Employees and officers with at least a year of service are entitled to receive a lump-sum payment upon termination of their employment, based on their length of service and rate of pay at the time of termination. Accrued severance benefits represent the amount which would be payable assuming all eligible employees and officers were to terminate their employment at the end of each reporting period.
The Company has adopted a defined benefit pension. Accrued severance benefits and accrued pension benefits are recognized as liabilities for employees and for retired employees who are qualified and choose to receive payments from the pension plan, respectively.
The accrued severance benefits and accrued pension benefits are presented as net of pension plan assets, and when pension plan assets exceed the accrued severance benefits and accrued pension benefits, the excess amount is presented as an investment asset.
Share-Based Payments
The fair value of the goods or employee services received in exchange for the grant of the options is recognized as expense and capital adjustment when the settlement term is equity-settled share based payment. If the fair value of goods or employee services cannot be estimated reliably, the fair value is estimated based on the fair value of the equity granted.
For cash-settled share-based payment, the fair value of the obligation the Company will assume is determined by the fair value of the goods or employee services received in exchange for the grant of the options. Until the liability is settled, the Company is required to measure the fair value at the end of reporting period and at settlement date. The change in fair value is recognized as expense.
Share-based payment transactions with an option for the parties to choose between cash and equity settlement are accounted for based on the substance of the transaction.
Income Tax and Deferred Income Tax
Income tax expense includes the current income tax under the relevant income tax law and the changes in deferred tax assets or liabilities. Deferred tax assets and liabilities represent temporary differences between financial reporting and the tax bases of assets and liabilities. Deferred tax assets and liabilities are recognized as the amount which will be credited or charged to income tax expense in the period the related temporary differences reverse in the future. Deferred tax effects applicable to items in the shareholders’ equity are directly reflected in the shareholders’ equity.
13
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
Provision and Contingent Liabilities
When there is a probability that an outflow of economic benefits will occur due to a present obligation resulting from a past event, and whose amount is reasonably estimable, a corresponding amount of provision is recognized in the financial statements. However, when such outflow is dependent upon a future event, is not certain to occur, or cannot be reliably estimated, a disclosure regarding the contingent liability is made in the notes to the financial statements.
3. Cash and Due from Bank
Cash and due from banks as of March 31, 2009 and December 31, 2008, are summarized as follows:
(in millions of Korean won) | Bank | Interest Rate(%) | 2009 | 2008 | ||||||||
Due from bank | Kookmin Bank | 2.20 | 25,778 | 1,849 |
Restricted cash and due from bank as of March 31, 2009 and December 31, 2008, are as follows:
(in millions of Korean won) | 2009 | 2008 | Restriction | |||||||
Due from Bank in Won | 3 | 3 | Guarantee deposits |
4. Equity Method Investments
Equity method investments as of March 31, 2009, are as follows:
(in millions of Korean won) | 2009 | |||||||||||||||
Investees | Number of Shares | Ownership(%) | Acquisition Cost | Book Value | ||||||||||||
Kookmin Bank1 | 496,379,116 | 100.00 | 13,027,020 | 15,872,598 | ||||||||||||
KB Investment & Securities Co., Ltd. | 15,600,000 | 100.00 | 418,331 | 436,660 | ||||||||||||
KB Asset Management Co., Ltd. | 7,667,550 | 100.00 | 101,961 | 73,489 | ||||||||||||
KB Real Estate Trust Co., Ltd. | 16,000,000 | 100.00 | 107,643 | 101,630 | ||||||||||||
KB Investment Co., Ltd. | 8,951,797 | 100.00 | 104,741 | 104,948 | ||||||||||||
KB Futures Co., Ltd. | 4,000,000 | 100.00 | 35,734 | 31,433 | ||||||||||||
KB Credit Information Co., Ltd. | 1,252,400 | 100.00 | 42,721 | 20,613 | ||||||||||||
KB Data Systems Co., Ltd. | 800,000 | 100.00 | 16,698 | 3,009 | ||||||||||||
13,854,849 | 16,644,380 | |||||||||||||||
1 | The acquisition cost of Kookmin Bank includes the contribution of |
14
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
Equity method investments as of December 31, 2008, are as follows:
(in millions of Korean won) | Number | 2008 | ||||||||||||||
Investees | of Shares | Ownership(%) | Acquisition Cost | Book Value | ||||||||||||
Kookmin Bank1 | 436,379,116 | 100.00 | 12,727,020 | 15,506,919 | ||||||||||||
KB Investment & Securities Co., Ltd. | 15,600,000 | 100.00 | 418,331 | 419,267 | ||||||||||||
KB Asset Management Co., Ltd. | 7,667,550 | 100.00 | 101,961 | 116,458 | ||||||||||||
KB Real Estate Trust Co., Ltd. | 16,000,000 | 100.00 | 107,643 | 97,469 | ||||||||||||
KB Investment Co., Ltd. | 8,951,797 | 100.00 | 104,741 | 103,788 | ||||||||||||
KB Futures Co., Ltd. | 4,000,000 | 100.00 | 35,734 | 38,206 | ||||||||||||
KB Credit Information Co., Ltd. | 1,252,400 | 100.00 | 42,721 | 44,488 | ||||||||||||
KB Data Systems Co., Ltd. | 800,000 | 100.00 | 16,698 | 18,457 | ||||||||||||
13,554,849 | 16,345,052 | |||||||||||||||
The changes in the difference between the acquisition cost of investment and the amount of the underlying equity in investee’s net assets as of March 31, 2009, are summarized as follows:
Beginning | ||||||||||||||||
(in millions of Korean won) | Balance | Increase | Amortization | Ending Balance | ||||||||||||
KB Investment & Securities Co., Ltd. | 93,054 | — | 5,697 | 87,357 |
15
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
The changes in equity method investments resulting from equity method valuation for the three-month period ended March 31, 2009, are summarized as follows:
(in millions of Korean won) | Valuation under Equity Method | |||||||||||||||||||||||||||||||
Gain(Loss) on | ||||||||||||||||||||||||||||||||
Valuation of | Accumulated | |||||||||||||||||||||||||||||||
Equity | Other | |||||||||||||||||||||||||||||||
Beginning | Acquisition | Retained | Method | Capital | Comprehensive | Ending | ||||||||||||||||||||||||||
Investees | Balance | Cost | Dividend | Earnings | Investments | Adjustment | Income(loss) | Balance | ||||||||||||||||||||||||
Kookmin Bank1 | 15,506,919 | 300,000 | — | 2,080 | 233,487 | (1,459 | ) | (168,429 | ) | 15,872,598 | ||||||||||||||||||||||
KB Investment & Securities Co., Ltd. | 419,267 | — | — | — | 10,309 | — | 7,084 | 436,660 | ||||||||||||||||||||||||
KB Asset Management Co., Ltd. | 116,458 | — | (49,000 | ) | — | 6,031 | — | — | 73,489 | |||||||||||||||||||||||
KB Real Estate Trust Co., Ltd. | 97,469 | — | — | — | 4,161 | — | — | 101,630 | ||||||||||||||||||||||||
KB Investment Co., Ltd. | 103,788 | — | — | — | 786 | — | 374 | 104,948 | ||||||||||||||||||||||||
KB Futures Co., Ltd. | 38,206 | — | (9,000 | ) | — | 1,367 | — | 860 | 31,433 | |||||||||||||||||||||||
KB Credit Information Co., Ltd. | 44,488 | — | (25,200 | ) | — | 1,325 | — | — | 20,613 | |||||||||||||||||||||||
KB Data Systems Co., Ltd. | 18,457 | — | (15,000 | ) | — | (448 | ) | — | — | 3,009 | ||||||||||||||||||||||
16,345,052 | 300,000 | (98,200 | ) | 2,080 | 257,018 | (1,459 | ) | (160,111 | ) | 16,644,380 | ||||||||||||||||||||||
1 | The beginning and ending balances of the investment in Kookmin Bank are net of |
The subsidiaries’ reviewed and audited financial statements as of March 31, 2009, were used in the application of the equity method. Financial information of above subsidiaries is disclosed in Notes 19 and 20.
Unrealized gain and loss as of March 31, 2009 and December 31, 2008, are listed below:
2009 | 2008 | |||||||||||||||
Unrealized | Unrealized | Unrealized | Unrealized | |||||||||||||
(in million of Korean won) | Loss | Gain | Loss | Gain | ||||||||||||
Kookmin Bank | 794 | — | 281 | — | ||||||||||||
KB Investment & Securities Co., Ltd. | — | (139 | ) | 408 | — | |||||||||||
KB Credit Information Co., Ltd. | 20 | — | 20 | — | ||||||||||||
KB Data Systems Co., Ltd. | — | (10,278 | ) | — | (8,082 | ) | ||||||||||
814 | (10,417 | ) | 709 | (8,082 | ) | |||||||||||
16
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
5. Loans Receivable
Loans receivable as of March 31, 2009 and December 31, 2008, are as follows:
Interest | ||||||||||||||
Rate (%) | ||||||||||||||
as of | ||||||||||||||
(in millions of Korean won) | Debtors | March 31,2009 | 2009 | 2008 | ||||||||||
General loans in won | KB Investment & Securities Co., Ltd. | — | — | 100,000 | ||||||||||
Subordinated loans in won | KB Investment & Securities Co., Ltd. | 5.94 | 100,000 | 100,000 | ||||||||||
100,000 | 200,000 | |||||||||||||
The maturities of loans as of March 31, 2009, are as follows:
4 to 6 | 7 to 12 | 1 to 3 | Over 3 | |||||||||||||||||||||
(in millions of Korean won) | 3 Months | Months | Months | Years | Years | Total | ||||||||||||||||||
Loans in won | — | — | — | — | 100,000 | 100,000 |
The provision ratio for loans which are subject to allowance for loan losses is as follows:
(in millions of Korean won) | 2009 | 2008 | ||||||
Loans subject to provision | 100,000 | 200,000 | ||||||
Allowance for loan losses | 500 | 1,000 | ||||||
Provision ratio(%) | 0.5 | 0.5 |
The changes in allowance for loans, subject to allowance for loan losses for the three-month period ended March 31, 2009, are as follows:
(in millions of Korean won) | 2009 | |||
Beginning balance | 1,000 | |||
Provision for possible loan losses | — | |||
Reversal of allowance for loans | (500 | ) | ||
Ending balance | 500 | |||
17
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
6. Property and Equipment
The changes in property and equipment for the three-month period ended March 31, 2009, are as follows:
Beginning | Ending | |||||||||||||||||||
(in millions of Korean won) | Balance | Acquisition | Disposal | Depreciation | Balance | |||||||||||||||
Property and equipment | 3,214 | 83 | — | 413 | 2,884 |
Property and equipment insured as of March 31, 2009, are as follows:
Insurance | ||||||||
(in millions of Korean won) | Asset Insured | Coverage | Insurance Company | |||||
Package insurance | Property and equipment | 1,374 | Samsung Fire & Marine Insurance Co., Ltd. |
7. Intangible Assets
The changes in intangible assets for the three-month period ended March 31, 2009, are as follows:
Beginning | Ending | |||||||||||||||||||
(in millions of Korean won) | Balance | Acquisition | Disposal | Amortization | Balance | |||||||||||||||
Software | 1,388 | — | — | 90 | 1,298 | |||||||||||||||
Other intangible assets | 621 | — | — | 40 | 581 | |||||||||||||||
2,009 | — | — | 130 | 1,879 | ||||||||||||||||
8. Borrowings
Borrowings as of March 31, 2009 and December 31, 2008, are as follows:
Interest | ||||||||||||||||||
Rate (%) | ||||||||||||||||||
Date of | Maturity | as of March | ||||||||||||||||
(in millions of Korean won) | Lender | Borrowing | Date | 31, 2009 | 2009 | 2008 | ||||||||||||
Borrowings in won | Hana Bank | 2008-09-29 | 2009-09-29 | 4.43 | 10,000 | 10,000 | ||||||||||||
Woori Bank | 2008-12-16 | 2009-11-17 | 4.44 | 70,000 | 100,000 | |||||||||||||
Woori Bank | 2008-11-26 | 2009-03-31 | — | — | 20,000 | |||||||||||||
80,000 | 130,000 | |||||||||||||||||
Other borrowings | 2008-12-19 | 2009-03-19 | — | — | 102,000 | |||||||||||||
Total | 80,000 | 232,000 | ||||||||||||||||
18
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
Issued debentures by the Company as of March 31, 2009 and December 31, 2008, are as follows:
Interest | ||||||||||||||||
Rate (%) | ||||||||||||||||
Issued | Maturity | as of March | ||||||||||||||
(in millions of Korean won) | Date | Date | 31, 2009 | 2009 | 2008 | |||||||||||
Unguaranteed debentures No. 1 | 2008-12-12 | 2011-12-12 | 7.48 | 500,000 | 500,000 | |||||||||||
Unguaranteed debentures No. 2-1 | 2009-03-20 | 2011-03-20 | 4.98 | 250,000 | — | |||||||||||
Unguaranteed debentures No. 2-2 | 2009-03-20 | 2012-03-20 | 5.30 | 50,000 | — | |||||||||||
800,000 | 500,000 | |||||||||||||||
Less: Discounts on debentures | (2,240 | ) | (1,428 | ) | ||||||||||||
797,760 | 498,572 | |||||||||||||||
The maturities of the borrowings as of March 31, 2009, are as follows:
4 to 6 | 7 to 12 | 1 to 3 | ||||||||||||||||||
(in millions of Korean won) | 3 Months | Months | Months | Years | Total | |||||||||||||||
Borrowings | — | 10,000 | 70,000 | — | 80,000 | |||||||||||||||
Debentures | — | — | — | 800,000 | 800,000 | |||||||||||||||
— | 10,000 | 70,000 | 800,000 | 880,000 | ||||||||||||||||
9. Accrued Severance Benefits
The changes in accrued severance benefits for the three-month period ended March 31, 2009, are summarized as follows:
(in millions of Korean won) | 2009 | |||
Beginning balance | 3,346 | |||
Transferred from subsidiaries1 | 109 | |||
Provision | 1,139 | |||
Payment | — | |||
Accrued severance benefits | 4,594 | |||
Less: Pension plan assets | (2,296 | ) | ||
Ending balance | 2,298 | |||
1 | Accrued severance benefits of |
As of March 31, 2009 and December 31, 2008, the details of pension plan assets are as follows:
(In millions of Korean won) | 2009 | 2008 | ||||||
Cash and cash equivalents | 1 | 438 | ||||||
Time deposits | 2,295 | 1,747 | ||||||
Total | 2,296 | 2,185 | ||||||
19
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
10. Capital Stock
Details of capital stock as of March 31, 2009, are as follows:
2009 | ||||
Number of shares authorized | 1,000,000,000 | |||
Par value per share | 5,000 | |||
Number of shares issued1 | 356,351,693 |
1 | There were no changes in number of shares for the three-month period ended March 31, 2009. |
11. Capital Surplus
The excess value, which is greater than capital reserve, of transferred shares of subsidiaries including treasury shares of Kookmin Bank over the Company’s issued capital stock is recorded as changes from valuation of equity method investments under the capital surplus of shareholders’ equity.
12. Retained Earnings
As required by Article 53 of the Financial Holding Company Act, the Company, each time it declares dividends, is required to appropriate, as a legal reserve, an amount equal to a minimum of 10% of annual net income, until such reserve equals its issued capital stock. The reserve is not available for the payment of cash dividends, but may be transferred to capital stock, or used to reduce accumulated deficit.
13. Share-Based Payments
Share-based payment plan for executives and employees of the Company for the three-month period ended March 31, 2009, is as follows:
Maximum Granted | ||||||||||
(in number of shares) | Grant Date | Shares | Grant Condition | |||||||
Stock Grant | 1st Series | 2008-09-29 | 110,583 | Services fulfillment1 | ||||||
Achievements of targets2 |
1 | In order to exercise their stock grants, at least three years of service as vesting period are required for executive directors, while the fulfillment of their remaining contracted service period is required for non-executive directors. | |
2 | 30 percent of the shares to be granted will be based on the achievement of the targeted asset incremental ratio, while another 30 percent will be based on the targeted return on asset ratio. The remaining 40 percent will be based on the achievement of the targeted relative TSR ratio. However, some of total granted shares will be compensated regardless of the above achievements of the targets as long as service requirement is fulfilled. |
20
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
The maximum number of total granted shares is determined on the contract date, and the number of shares to be compensated is determined by the achievements of the targets. The Company may settle the payment by either cash or equity.
The value of stock grant is measured at fair value as of March 31, 2009. The amount for each stock grant isW 33,000 per share.
The changes in the shares to be granted for the three-month period ended March 31, 2009, are as follows:
Remaining | ||||||||||||||||||||||||
Period to | ||||||||||||||||||||||||
(in number of shares) | Beginning | Granted | Exercise | Expired1 | Ending | Maturity | ||||||||||||||||||
Stock grant | 160,006 | 717 | — | 50,140 | 110,583 | 2.46 years |
1 | Stock grant decreased by 46,478 shares as executives and employees voluntarily returned their existing shares. It also decreased by 3,662 shares due to the pre-conversion adjustment to the holding company. |
Accrued expense for the three-month period ended March 31, 2009, due to share-based payment plan isW 630 million, and the cost ofW 167 million is recorded as salary expense under selling and administrative expenses.
14. Income Tax
Income tax expense for the three-month period ended March 31, 2009, consists of the following:
(in millions of Korean won) | 2009 | |||
Current income taxes | — | |||
Changes in deferred income taxes due to temporary differences | 1,559 | |||
Income tax liabilities directly charged to the shareholders’ equity1 | (1,341 | ) | ||
Income tax expense | 218 | |||
1 | Income tax liabilities directly charged to the shareholders’ equity as of March 31, 2009, are as follows: |
(in millions of Korean won) | 2009 | |||
Gain on valuation of equity method investments | (995 | ) | ||
Loss on valuation of equity method investments | (346 | ) | ||
Total | (1,341 | ) | ||
21
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
The reconciliation between income tax expense and income before income tax is as follows:
(in millions of Korean won) | 2009 | |||
Income before income tax | 238,549 | |||
Calculated tax amount of tax rate (24.2 %) | 57,729 | |||
Adjustments | ||||
Non-deductible expense | 41 | |||
Exclusion of deferred income tax from equity method investments | (61,998 | ) | ||
Exclusion of deferred income tax from net operating loss carryforwards | 4,168 | |||
The effect of changes in tax rate | 18 | |||
Others | 260 | |||
Income tax expense | 218 | |||
Effective tax rate (%) | 0.09 |
The changes in accumulated temporary differences and net operating loss for the three-month period ended March 31, 2009, are as follows:
Deferred Income Tax | ||||||||||||||||||||||||
Temporary Difference | Assets (Liabilities) | |||||||||||||||||||||||
(in millions of Korean won) | Beginning | Increase | Decrease | Ending | 2009 | 2008 | ||||||||||||||||||
Equity method investments | (1,391,338 | ) | (259,771 | ) | (259,098 | ) | (1,392,011 | ) | (306,242 | ) | (306,094 | ) | ||||||||||||
Accrued severance benefits | 2,180 | 1,040 | — | 3,220 | 709 | 480 | ||||||||||||||||||
Accrued pension benefits | (2,180 | ) | (132 | ) | — | (2,312 | ) | (509 | ) | (480 | ) | |||||||||||||
Compensation cost of stock options | — | 630 | — | 630 | 139 | — | ||||||||||||||||||
Net operating loss carryforwards | 11,466 | 17,223 | — | 28,689 | 6,312 | 2,523 | ||||||||||||||||||
(1,379,872 | ) | (241,010 | ) | (259,098 | ) | (1,361,784 | ) | (299,591 | ) | (303,571 | ) | |||||||||||||
Unrealizable deferred income tax assets (liabilities) 1,2 | (305,800 | ) | (308,220 | ) | ||||||||||||||||||||
Net deferred assets (liabilities) | (6,209 | ) | (4,649 | ) | ||||||||||||||||||||
1 | Tax effects from equity method valuation are estimated based on each subsidiary’s taxable amount subject to deferred tax and its realization. As of March 31, 2009, | |
2 | As of March 31, 2009, others and net operating loss carryforwards in deductible temporary differences are not expected to recover in the future; therefore, they are not recognized as deferred income tax assets. |
22
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
15. Earnings Per Share
Basic earnings per share for the three-month period ended March 31, 2009, is calculated as follows:
(in Korean won and in number of shares) | 2009 | |||
Net income | 238,330,778,783 | |||
Weighted-average number of common shares outstanding1 | 308,944,022 | |||
Basic earnings per share | 771 |
1 | The weighted average number of common shares outstanding is computed as follows: |
(in number of shares) | 2009 | |||
Beginning | 356,351,693 | |||
Treasury stock1 | (47,407,671 | ) | ||
Weighted average number of common shares outstanding | 308,944,022 | |||
1 | Shares owned by subsidiaries are included in treasury stock, when calculating the number of weighted average number of common shares outstanding. |
The basic and diluted earnings per share for the year ended December 31, 2008, wereW 2,134.
Basic earnings per share for the three-month period ended March 31, 2009, is equal to diluted earnings per share because there is no dilution in the weighted average number of common stock outstanding.
The number of potential common stock which are not included for the computation of diluted earnings per share for the three-month period ended March 31, 2009, due to the antidilutive effect, but may result in the dilution of earnings per share in the future is as follows:
(in number of shares) | 20091 | |||
Stock grants | 446,814 |
1 | The number of granted shares for executives and employees of Kookmin Bank, one of the subsidiaries of the Company, is included in total number of stock grants. |
23
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
16. Comprehensive Income
Comprehensive income for the three-month period ended March 31, 2009, consists of:
(in millions of Korean won) | 2009 | |||
Net income | 238,331 | |||
Net accumulated comprehensive losses of equity method investments, net of tax effect | (161,453 | ) | ||
Comprehensive income | 76,878 | |||
17. Supplemental Cash Flows Information
Restricted due from banks are not accounted for in statement of cash flows.
Significant transactions not involving cash inflows or outflows for the three-month period ended March 31, 2009, are as follows:
(in millions of Korean won) | 2009 | |||
Changes in comprehensive income due to valuation of equity method investments | (161,453 | ) | ||
Changes in capital adjustment due to valuation of equity method investments | (1,459 | ) | ||
Changes in retained earnings due to equity method investments | 2,080 |
24
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
18. Related Party Transactions
The details of the Company’s ownership in its subsidiaries, second tier subsidiaries and equity method investments are summarized in Notes 1 and 4.
As of March 31, 2009, the ownerships in associates over which the Company has significant influence through its subsidiaries are as follows:
Number of | ||||||||||||
Investors | Investees | Shares | Ownership (%) | |||||||||
Kookmin Bank | KLB Securities Co., Ltd.1 | 4,854,713 | 36.41 | |||||||||
Jooeun Industrial Co., Ltd. 1 | 1,999,910 | 99.99 | ||||||||||
Balhae Infrastructure Fund | 10,407,458 | 12.61 | ||||||||||
Korea Credit Bureau Co., Ltd. | 180,000 | 9.00 | ||||||||||
Kookmin Bank Singapore Ltd. 1 | 30,000,000 | 100.00 | ||||||||||
Kookmin Finance Asia Ltd. (HK) 1 | 700,000 | 100.00 | ||||||||||
JSC Bank CenterCredit | 44,136,676 | 30.55 | ||||||||||
KB06-1 Venture Partnership Fund | 200 | 50.00 | ||||||||||
KB08-1 Venture Partnership Fund | 100 | 66.67 | ||||||||||
KB Investment | KB06-1 Venture Partnership Fund | 100 | 25.00 | |||||||||
KB08-1 Venture Partnership Fund | 50 | 33.33 | ||||||||||
Kookmin Investment Partnership No.161 | 184 | 20.00 | ||||||||||
Kookmin China Fund No.11 | 13 | 50.00 | ||||||||||
KB 03-1 Venture Fund1 | 125 | 16.67 | ||||||||||
NPC 05-6 KB Venture Fund | 500 | 20.00 | ||||||||||
NPC 07-5 KB Venture Fund | 500 | 20.00 | ||||||||||
KB 03-1 Corporate Restructuring Fund1 | 41 | 29.00 | ||||||||||
KB 06-1 Corporate Restructuring Fund | 12 | 5.38 | ||||||||||
NPS 06-5 KB Corporate Restructuring Fund | 4,750,000,000 | 13.57 |
1 | Under liquidation as of March 31, 2009. |
25
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
Revenues and expenses from significant transactions with the subsidiaries for the three-month period ended March 31, 2009, are as follows:
(in millions of Korean won) | Accounts | |||||||||||||||||||
Interest on | ||||||||||||||||||||
Interest | Due from | |||||||||||||||||||
Revenues | Expenses | on Loan | Banks | Rent | Total | |||||||||||||||
KB Financial Group Inc. | Kookmin Bank | — | 41 | — | 41 | |||||||||||||||
KB Investment & Securities Co.,Ltd. | 3,334 | — | — | 3,334 | ||||||||||||||||
Kookmin Bank | KB Financial Group Inc. | — | — | 137 | 137 | |||||||||||||||
3,334 | 41 | 137 | 3,512 | |||||||||||||||||
Significant balances with related parties as of March 31, 2009, are as follows:
(in million of Korean won) | Accounts | |||||||||||||||||||
Due from | Guarantee | |||||||||||||||||||
Creditor | Debtor | Loan | Bank | Deposit | Total | |||||||||||||||
KB Financial Group Inc. | Kookmin Bank | — | 25,778 | 15,085 | 40,863 | |||||||||||||||
KB Investment & Securities Co., Ltd. | 100,000 | — | — | 100,000 | ||||||||||||||||
100,000 | 25,778 | 15,085 | 140,863 | |||||||||||||||||
Significant balances with related parties as of December 31, 2008, are as follows:
(in million of Korean won) | Accounts | |||||||||||||||||||
Due from | Guarantee | |||||||||||||||||||
Creditor | Debtor | Loan | Bank | Deposit | Total | |||||||||||||||
KB Financial Group Inc. | Kookmin Bank | — | 1,849 | 13,129 | 14,978 | |||||||||||||||
KB Investment & Securities Co., Ltd. | 200,000 | — | — | 200,000 | ||||||||||||||||
200,000 | 1,849 | 13,129 | 214,978 | |||||||||||||||||
Compensation for key management for the three-month period ended March 31, 2009, consists of:
(in millions of Korean won) | 2009 | |||
Salaries | 1,222 | |||
Accrued severance benefits | 72 | |||
Share-based payments1 | 167 | |||
Total | 1,461 | |||
1 | Details of share-based payments are described in Note 13. |
Key management includes non-executive directors, registered directors, and non-registered directors who have the authority for making decisions in the Company’s financial planning and management.
26
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
19. Condensed Financial Information of Subsidiaries
The condensed statements of financial position of subsidiaries as of March 31, 2009, are as follows:
(in millions of Korean won) | Total Assets | Total Liabilities | Shareholders’ Equity | |||||||||
Kookmin Bank1 | 270,721,180 | 252,966,226 | 17,754,954 | |||||||||
KB Investment & Securities Co., Ltd. | 1,049,661 | 703,926 | 345,735 | |||||||||
KB Asset Management Co., Ltd. | 103,669 | 30,159 | 73,510 | |||||||||
KB Real Estate Trust Co., Ltd. | 209,644 | 108,014 | 101,630 | |||||||||
KB Investment Co., Ltd. 1 | 286,679 | 10,454 | 276,225 | |||||||||
KB Futures Co., Ltd. | 165,571 | 134,138 | 31,433 | |||||||||
KB Credit Information Co., Ltd. | 47,438 | 26,845 | 20,593 | |||||||||
KB Data Systems Co., Ltd. | 37,955 | 24,667 | 13,288 | |||||||||
272,621,797 | 254,004,429 | 18,617,368 | ||||||||||
1 | Financial information of Kookmin Bank and KB Investment Co., Ltd. is based on their consolidated financial statements. |
The condensed statements of income of subsidiaries as of March 31, 2009, are as follows:
Net Income | ||||||||||||||||||||
Operating | Operating | Operating | Before Income | |||||||||||||||||
(in millions of Korean won) | Revenue | Expense | Income(loss) | Tax | Net Income | |||||||||||||||
Kookmin Bank1 | 11,770,498 | 11,427,906 | 342,592 | 241,980 | 160,008 | |||||||||||||||
KB Investment & Securities Co., Ltd. | 120,625 | 96,634 | 23,991 | 23,596 | 16,555 | |||||||||||||||
KB Asset Management Co., Ltd. | 15,478 | 6,794 | 8,684 | 8,464 | 6,031 | |||||||||||||||
KB Real Estate Trust Co., Ltd. | 11,359 | 5,421 | 5,938 | 5,948 | 4,161 | |||||||||||||||
KB Investment Co., Ltd.1 | 1,662 | 1,823 | (161 | ) | 639 | 785 | ||||||||||||||
KB Futures Co., Ltd. | 6,052 | 4,523 | 1,529 | 1,649 | 1,367 | |||||||||||||||
KB Credit Information Co., Ltd. | 13,319 | 11,600 | 1,719 | 1,720 | 1,325 | |||||||||||||||
KB Data Systems Co., Ltd. | 22,565 | 20,452 | 2,113 | 2,292 | 1,749 | |||||||||||||||
11,961,558 | 11,575,153 | 386,405 | 286,288 | 191,981 | ||||||||||||||||
1 | Financial information of Kookmin Bank and KB Investment Co., Ltd. is based on their consolidated financial statements. |
27
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
20. Financing and Operating Status of Subsidiaries
Financing status of the Company and its subsidiaries as of March 31, 2009, is as follows:
(in millions of Korean won) | Deposits | Borrowings | Debentures1 | Total | ||||||||||||
KB Financial Group Inc. | — | 80,000 | 797,760 | 877,760 | ||||||||||||
Kookmin Bank2 | 166,757,795 | 17,845,528 | 39,734,234 | 224,337,557 | ||||||||||||
KB Investment & Securities Co., Ltd. | 53,517 | 583,263 | — | 636,780 | ||||||||||||
KB Asset Management Co.,Ltd. | 18,859 | — | — | 18,859 | ||||||||||||
KB Real Estate Trust Co., Ltd. | 180 | 93,406 | — | 93,586 | ||||||||||||
KB Investment Co., Ltd. 2 | — | 9,900 | — | 9,900 | ||||||||||||
KB Futures Co., Ltd. | 122,861 | 7,000 | — | 129,861 | ||||||||||||
KB Credit Information Co., Ltd. | — | 19,800 | — | 19,800 | ||||||||||||
KB Data Systems Co., Ltd. | — | 7,000 | — | 7,000 | ||||||||||||
166,953,212 | 18,645,897 | 40,531,994 | 226,131,103 | |||||||||||||
1 | Net of discounts. | |
2 | Financial information of Kookmin Bank and KB Investment Co., Ltd. is based on their consolidated financial statements. |
Operating status of the Company and its subsidiaries as of March 31, 2009, is as follows:
Cash and Due | ||||||||||||||||
(in millions of Korean won) | Loans1 | Securities | from Bank | Total | ||||||||||||
KB Financial Group Inc. | 99,500 | 16,644,380 | 25,778 | 16,769,658 | ||||||||||||
Kookmin Bank2 | 204,743,274 | 40,224,429 | 6,942,963 | 251,910,666 | ||||||||||||
KB Investment & Securities Co., Ltd. | 292,749 | 634,073 | 71,223 | 998,045 | ||||||||||||
KB Asset Management Co., Ltd. | 1,818 | 3,849 | 84,978 | 90,645 | ||||||||||||
KB Real Estate Trust Co., Ltd. | 1,194 | 4,172 | 461 | 5,827 | ||||||||||||
KB Investment Co., Ltd. 2 | 21,567 | 255,589 | 1,603 | 278,759 | ||||||||||||
KB Futures Co., Ltd. | — | 26,360 | 133,161 | 159,521 | ||||||||||||
KB Credit Information Co., Ltd. | — | — | 28,082 | 28,082 | ||||||||||||
KB Data Systems Co., Ltd. | 314 | — | 16,836 | 17,150 | ||||||||||||
205,160,416 | 57,792,852 | 7,305,085 | 270,258,353 | |||||||||||||
1 | Net of allowance for loan losses, discounted present value, and deferred loan gains (losses). | |
2 | Financial information of Kookmin Bank and KB Investment Co., Ltd. is based on their consolidated financial statements. |
28
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
The changes in allowance for loan losses and other assets for each entity for the three-month period ended March 31, 2009, are as follows:
Increase | ||||||||||||
(in millions of Korean won) | Beginning | (Decrease) | Ending | |||||||||
KB Financial Group Inc. | 1,000 | (500 | ) | 500 | ||||||||
Kookmin Bank 1 | 3,677,040 | 375,177 | 4,052,217 | |||||||||
KB Investment & Securities Co., Ltd. | 22,978 | (3,124 | ) | 19,854 | ||||||||
KB Asset Management Co., Ltd. | 84 | 279 | 363 | |||||||||
KB Real Estate Trust Co., Ltd. | 65,808 | (14,764 | ) | 51,044 | ||||||||
KB Investment Co., Ltd. 1 | 632 | (5 | ) | 627 | ||||||||
KB Futures Co., Ltd. | — | — | — | |||||||||
KB Credit Information Co., Ltd. | 37 | — | 37 | |||||||||
KB Data Systems Co., Ltd. | 106 | (17 | ) | 89 | ||||||||
3,767,685 | 357,046 | 4,124,731 | ||||||||||
1 | Financial information of Kookmin Bank and KB Investment Co., Ltd. is based on their consolidated financial statements. |
21. Subsidiaries’ Contribution to Gain and Loss
Subsidiaries’ contributions to the Company’s gain and loss from equity method valuation for the three-month period ended March 31, 2009, are as follows:
Contribution | ||||||||
(in millions of Korean won) | Amount | Ratio(%) | ||||||
Kookmin Bank | 233,487 | 90.84 | ||||||
KB Investment & Securities Co., Ltd. | 10,309 | 4.01 | ||||||
KB Asset Management Co., Ltd. | 6,031 | 2.35 | ||||||
KB Real Estate Trust Co., Ltd. | 4,161 | 1.62 | ||||||
KB Investment Co., Ltd. | 786 | 0.31 | ||||||
KB Futures Co., Ltd. | 1,367 | 0.53 | ||||||
KB Credit Information Co., Ltd. | 1,325 | 0.51 | ||||||
KB Data Systems Co., Ltd. | (448 | ) | (0.17 | ) | ||||
257,018 | 100.00 | |||||||
22. Insurance
As of March 31, 2009, the Company and subsidiaries jointly have financial package insurance policies which include Banker’s Blanket Bond, Directors Reparation Liability Insurance, Professionals Reparation Liability Insurance and Employment Practices Liability Insurance with Samsung Fire & Marine Insurance Co., Ltd. The total insurance coverage isW87,500 million.
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KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
23. Commitments
The commitments made with financial institutions on the limit of corporate borrowings and the related amounts already borrowed as of March 31, 2009 and December 31, 2008, are as follows:
2009 | 2008 | |||||||||||||||
Limit for | Amounts | Limit for | Amounts | |||||||||||||
(in millions of Korean won) | Borrowing | Borrowed | Borrowing | Borrowed | ||||||||||||
Hana Bank | 50,000 | 10,000 | 50,000 | 10,000 | ||||||||||||
Woori Bank | 130,000 | 70,000 | 130,000 | 120,000 | ||||||||||||
180,000 | 80,000 | 180,000 | 130,000 | |||||||||||||
24. Value Added Information
Information for calculating value added for the three-month period ended March 31, 2009, is as follows:
(in millions of Korean won) | 2009 | |||
Personal expenses | 3,443 | |||
Severance benefits | 1,139 | |||
Welfare expenses | 546 | |||
Rental expenses | 221 | |||
Depreciation | 413 | |||
Amortization | 130 | |||
Tax and dues | 46 | |||
5,938 | ||||
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KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
25. Disclosure on Expected Impact upon Adoption of K-IFRS
1. Preparation of K-IFRS adoption
Pursuant tothe Act on External Audit of Stock Companies, article 13, KB Financial Group Inc. is required to adopt K-IFRS from 2011. Thus, in June 2007, KB Financial Group Inc. formed a task-force (“K-IRFS TFT”) to prepare for the adoption of K-IFRS and is currently in the transitioning process that consists of three phases as follows: Phase I (adoption assessment stage), Phase II (policy setting, system design and development stage) and Phase III (implementation stage).
2. K-IFRS adoption plan and work force
1) K-IFRS adoption plan
Phase | Period | Procedures | ||||||
Phase I (“Adoption assessment stage”) | June 2007 ~ February 2008 | • | Analyzing GAAP differences | |||||
• | Analyzing K-IFRS | |||||||
• | Analyzing GAAP differences between K-IFRS and Statements of Korean Financial Accounting Standard (“SKFAS”) | |||||||
• | Analyzing the impacts | |||||||
• | Analyzing the financial impacts | |||||||
• | Analyzing the impacts of specific accounts, disclosure and IT | |||||||
• | Detailed planning for Phase II | |||||||
• | Research and benchmarking on success cases, others | |||||||
Phase II (“Policy setting, system design and development stage”) | March 2008 ~ December 2009 | • | Framing accounting policies | |||||
• | Framing specific accounting methodology | |||||||
• | Set-up united account structure “Chart of Accounts” | |||||||
• | Build Infrastructures for K-IFRS adoption | |||||||
• | Establish accounting policies, accounting guidelines and accounting manuals | |||||||
• | Restructuring of financial reporting system | |||||||
• | Developing K-IFRS system (define system requirement, analysis, designing, developing, others) | |||||||
• | Knowledge transfer and technical trainings, others | |||||||
Phase III (“Implement action stage”) | January 2010 | • | Preparing financial data in accordance with K-IFRS | |||||
• | Preparing financial data as of January 1, 2010 | |||||||
• | Preparing quarterly financial and disclosure data for year 2010 |
2) Work force
In June, 2007, KB Financial Group Inc. assembled an IFRS task-force team which consists of accounting specialists, accounting-consulting firms and others in order to effectively and efficiently adopt K-IFRS. The team is divided into operates within its specialized areas such as closing, disclosure, allowance for loan losses, revenue recognition, investments, derivative instruments, fair valuation, overseas branches, SPC, and others — based on its significance and efficiency of project management. In addition, IT IFRS team that consists of IT specialist in each area, was organized for K-IFRS IT system development.
KB Financial Group Inc. has reported the progress of the K-IFRS adoption and significant issues to the audit committee, the Board of Directors, and others.
31
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
3. Status of each phase
1) Phase I (“Adoption assessment stage”)
Between June 2007 and February 2008, KB Financial Group Inc. assessed the potential impacts of K-IFRS adoption and planed detailed procedures.
a. Analyzing GAAP differences and the financial impacts
KB Financial Group Inc. performed the detailed analysis of the requirements under K-IFRS and identified GAAP differences between SKFAS (current accounting standards) and K-IFRS in order to analyze the impacts on the financial information, business operation, financial reporting system, and financial performance indicators, and others. Consequently, KB Financial Group Inc. identified the impacts on financial information, major accounts, disclosures and IT.
b. Research on success case and benchmarking
Due to distinctiveness of KB Financial Group Inc., research and benchmarking of the success cases of preceding IFRS adopters among European financial institutions was performed where necessary in order to form possible alternatives.
2) Phase II (“policy setting, system design and development stage “)
KB Financial Group Inc. started the Phase II since March 2008, and the procedure will be continued until the end of 2009. The purpose of the phase is to frame account policies, structure infrastructures and develop system.
a. Accounting policy setting
Considering the K-IFRS requirements and KB Financial Group Inc.’s status, KB Financial Group Inc. selected the accounting policies that are deemed to better represent KB Financial Group Inc.’s substance after detailed analysis of accounting treatment options and has outlined specific accounting methodology.
b. Set-up united account structure “Chart of Accounts”
To produce timely and proper financial data on a consolidated basis in accordance with K-IFRS, KB Financial Group Inc. has set up united account structure.
c. Building Infrastructures for K-IFRS adoption
For timely and proper financial reporting, KB Financial Group Inc. analyzed the current financial report process, and identified the expected financial impacts. Consequently, KB Financial Group Inc. is restructuring of financial report process and revising the related accounting policies, guidelines and manuals.
d. System Design
KB Financial Group Inc. completed system analysis and requirement definition for developing K-IFRS system.
32
KB Financial Group Inc.
Notes to Non-Consolidated Financial Statements
March 31, 2009
March 31, 2009
4. Plan going forward
KB Financial Group Inc. will complete its system development as designed by end of July, 2009 and plans to assure the data integrity and the system completeness through sufficient testing till the end of 2009.
In addition, from May to December 2009, KB Financial Group Inc. plans to train its management and employee, and transfer necessary knowledge for adoption of K-IFRS and will have focus training with team and personal in charge to increase the ability and capacity in adoption of K-IFRS.
KB Financial Group Inc. will prepare its first financial statements in accordance with K-IFRS as of January 1, 2010 and will perform quarterly closing thereafter using the developed system.
5. Significant GAAP differences between K-IFRS and SKFAS
KB Financial Group Inc. is expected to face significant GAAP differences between K-IFRS and SKFAS (current accounting standards) upon preparing financial statement in accordance with K-IFRS are, but not limited to, as follows: scope of consolidation, allowance for loan losses, revenue recognition, derecognition of financial instruments, measurement of financial instruments and employee benefits.
33